A Cash Flow Statement (CFS) shows how cash is moving in and out of a business. The more cash it generates, the more liquid the company is. It also tells you how stable a company is financially.
A CFS is made up of three main components: investment, operating and financing activities. A CFS also includes any external funds that have come into the company.
If you break down a CFS you will understand exactly what the cash generated by the company is used for and how much has been generated from those activities.
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