● A cash flow statement (CFS) is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.
● The CFS measures how well a company manages its cash position, meaning how well the company generates cash.
● The CFS complements the balance sheet and the income statement.
● The main components of the CFS are cash from three areas: operating activities, investing activities, and financing activities.
● The two methods of calculating cash flow are the direct method and the indirect method.
Depreciation is a non-cash expense, and needs to be added back to the cash flow statement in the operating activities section, alongside other expenses such as amortization and depletion.
