How to Read a Cash Flow Statement


  • 3 main sections
    • Cash from operating activities
      • From customers
      • Less suppliers, employees and government
      • Positive figures indicate more cash
      • Negative figures indicate less cash
    • Cash from investing activities
      • Long-term capital assets
      • Negative figure indicates purchases
      • Positive figures indicates sales of old assets
    • Cash from financing activities
      • Repayment of debt and loans
      • Capital contributions and withdrawals
      • Negative figure means the business used cash to pay back loans/owner withdrawals
      • Positive figure means cash came in from outside to finance activities
    • It’s a good sign if cash from operating activities is enough to cover financing and investing activities
    • Cash at the end of the year is the cash in your bank account or petty cash