From the course: A Guide to Understanding Financial Statements
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The three sections of the statement of cash flows
From the course: A Guide to Understanding Financial Statements
The three sections of the statement of cash flows
- [Instructor] As we spoke about earlier, the statement of cash flows is broken out between three sections, cash from operating activities, cash from investing activities, and cash from financing activities. Let's start with cash from operating activities. This represents the actual cash movement from anything that flowed through from your income statement, as well as the net change between your current assets and current liabilities. The general idea is that we're trying to showcase cash movements from what it took to operate your business. So we start with our bottom line profit from the net income amount shown on the profit and loss. And then take the difference between all of our current assets and liabilities, such as accounts receivable, or accounts payable, and so forth. We then have our next section, cash from investing activities. Like we spoke about earlier, one of the most common accounts that'll show up on this section is amounts paid for fixed assets. Generally, any…
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