Where cash actually came from and where it went.
The cash flow statement tracks actual cash moving in and out, grouped into operating activities (the business itself), investing activities (buying or selling assets), and financing activities (loans and owner money). It's the third core financial statement, and the one that explains the difference between profit and the bank balance.
A business can be profitable and still run out of cash — growth eats cash through receivables and inventory — or unprofitable while cash-rich on borrowed money. The cash flow statement is where those stories become visible.
Net profit was $10,000 this quarter, but receivables grew $8,000 (cash not yet collected) and a $5,000 loan payment went out. Operating cash flow tells that story: profitable on paper, only $2,000 better off in cash from operations — and less after financing.
Profit & Loss Statement (Income Statement) · Balance Sheet · Working Capital — or browse the full plain-English glossary.
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