A cashflow statement summarises the movement of cash and cash equivalents into and out of a company. Cashflow statements measure how well a business manages its cash position, tracking the company’s ability to generate cash to meet debt obligations and operational expenses.

1. WHAT IS
A CASHFLOW
STATEMENT?

2. A C A S H F L O W S TAT E M E N T
S U M M A R I S E S T H E
M O V E M E N T O F C A S H A N D
C A S H E Q U I VA L E N T S I N T O
A N D O U T O F A C O M P A N Y.
M A R K L Y T T L E T O N
2

3. 3
M A R K L Y T T L E T O N
Cashflow statements measure how well a
business manages its cash position, tracking
the company’s ability to generate cash to meet
debt obligations and operational expenses.
Cashflow statements complement income
statements and balance sheets, helping
to demonstrate the financial health, or
otherwise, of a company. Cashflow statements
are typically used to paint a picture of how well
a company is running and how it is spending
its money. They help creditors to determine a
business’s liquidity and its ability to pay down
debts and meet operating expenses.
Particularly important to investors, cashflow
statements illustrate whether a company is
on solid financial ground. Savvy investors use
cashflow statements as a basis upon which to
make better-informed investment decisions.
Cashflow statements detail cashflow from
operating, investing, financing and non-cash
activities. There are two methods of calculating
cashflow: indirect and direct.
Analysing changes in a business’s cashflow
from one period to the next provides
the investor with a clearer picture of its
performance, helping them to determine
whether the company is on the brink of
success or bankruptcy.
Cashflow statements detail cashflow
from operating, investing, financing
and non-cash activities. There
are two methods of calculating
cashflow: indirect and direct.

4. M A R K L Y T T L E T O N .
YOU CAN LEARN
M O R E A B O U T T H E C O M P L E X I T I E S O F F O U N D I N G ,
O P E R A T I N G A N D S C A L I N G A B U S I N E S S B Y V I S I T I N G
T H E B L O G O F M A R K L Y T T L E T O N .