Definition of Statement Of Cash Flows

Statement of cash flows is one of the financial statements that specifically tell us about the liquidity position of the company and more specifically the cash generated or utilized by a company. The cash flows statement typically breaks a business that involves cash in three different activities. These are operating activities, investing activities and financing activities.

• Operating activities are activities such as sales, purchase of inventory, paying of interest, taxes, salaries working capital changes that involved cash inflows or outflows in the current period.
• Investing activities involve cash flows related to short term investments like marketable securities and long term investments like non-current assets. 
• Financing activities area shows the cash paid or generated through debt or equity instruments. Dividend payments are also displayed here.