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3 Essential Sections of a Cash Flow Statement


Managing your Cash Flow

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Unit Video

Unit Summary

3 sections that should be included in a cash flow statement:
  1. Operating Activities
  2. Investing Activities
  3. Financing Activities

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Hi, In this video you will learn about the 3 sections that a cash flow statement should include.
Cash is king as the saying goes, so documenting cash inflows and outflows in the form of a cash flow statement is essential in any business. No matter how well the business is doing, if cash in the company isn’t managed well, it could go bankrupt.
Here are 3 sections that should be included in a cash flow statement:
  1. Operating Activities covers all cash inflows or outflows related to the running of the business including sales, interest revenue, dividend revenue representing cash in and stock purchases, payroll, Taxes, rent, utilities etc..
  2. Investing Activities covers all transactions involving the purchase or sale of assets, securities, mergers and acquisitions, in essence items that are not directly linked to the day to day operation of your business
  3. Financing Activities include flow of cash to and from investors –equity financing or creditors –debt financing
So as a summary Operating, Investing and Financing activities should be clearly present in the cash flow statement that a finance manager prepares on at least a monthly basis.
Good management manages cash well!