Cash Flow Statement

·       A cash flow statement focuses on various activities and items which bring about changes in the cash balance between two balance sheet dates.

·       Goods bought on credit and goods sold on credit will not be included in this statement as these contacts have no effect on inflow and outflow of cash.

·       Classified into three categories:

o   Operating activities

o   Investing activities

o   Financial activities

·       Cash flow from operating activities (CFO) indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers. Example: cash received from debtors for goods and services, interest and dividend received on loans and investment, cash payment for goods and services, merchandise, wages, interest, taxes, supplies and other.

·       Cash flow from investing activities (CFI) reports how much cash has been generated or spent from various investment-related activities in a specific period. Investing activities include purchases of physical assets, investments in securities, or the sale of securities or assets.

·       Cash flow from financing activities (CFF) is a section of a company’s cash flow statement, which shows the net flows of cash that are used to fund the company. Financing activities include transactions involving debt, equity, and dividends.

Fund Flow Statement	Cash Flow Statement
Shows causes for changes in net working capital. No opening or closing balances.	Shows causes for changes in cash. Opening and closing balances of cash.
Deals with all components of working capital. Useful for long-term financing. Based on accrual basis of accounting.	Deals only with cash.   Useful for short-term financing. Based on cash basis of accounting.