Definitions [1]
Definition: Cash Flow Statement
- Cash Flow Statement is a statement that shows inflows and outflows of cash and cash equivalents under Operating, Investing and Financing Activities of a company during a particular accounting period.
- Cash Flow Statement can be defined as a “Statement which summarises sources of cash inflows and uses for cash outflows during a particular period.”
Key Points
Key Points: Cash Flow Statement
- A Cash Flow Statement shows cash inflows and outflows during a specific accounting period.
- It covers cash from operating, investing, and financing activities.
- It helps explain the net change in cash between two balance sheet dates.
- The statement is useful for short-term planning, liquidity analysis, and decision-making.
- It is prepared as per Accounting Standard-3 (AS-3 Revised).
- It helps assess a company’s performance, liquidity, and solvency through activity-wise analysis.
- Limitations: It ignores non-cash items, reflects only past data, and does not measure profit.
