As such, they can use the statement to make better, more informed decisions about their investments. The CFS is equally important to investors because it tells them whether a company is on solid financial ground. It can also refer more specifically to a real or. Also known as the statement of cash flows, the CFS helps its creditors determine how much cash is available (referred to as liquidity) for the company to fund its operating expenses and pay down its debts. Cash flow refers in general to payments made into or out of a business, project, or financial product. The cash flow statement paints a picture as to how a company’s operations are running, where its money comes from, and how money is being spent. The two methods of calculating cash flow are the direct method and the indirect method.The main components of the CFS are cash from three areas: Operating activities, investing activities, and financing activities.This financial statement complements the balance sheet and the income statement.
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