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com/investment-decisions/types-of-cash-flow

The statement of cash flows reports the cash receipts , cash payments and net
change in cash resulting from operating activities, investing activities and
financing activities during a period.
The information in a CF statement should help investors, creditors
1) The entity’s ability to generate future cash flows
By examining relationship between items in the statement of cash flows ,
investors can make predictions of amounts , timing and uncertainty of
future cash flows

2) The entity’s ability to pay dividends and meet obligations

If a company does not have adequate cash , it cannot pay employees , settle
debts or pay dividends. So
Employees ,creditors and stockholders should be particularly interested in this
statement , because it alone shows the flows of cash in a business

3) Now I explain The reasons for the difference between net income and net
cash provided (used) by operating activities .
Net income provides information on the success or failure of a business
enterprise. However, some financial statement users are critical of accrual
basis (according to this net income means companies recognize revenues
when earned rather than when they receive cash & it also means
recognizing expenses when incurred rather than when paid.)
some financial statement users are critical of accrual basis net income
because it requires many estimates and as a result users often challenge
the reliability of the number.
such is not the case with cash .

4) the cash investing and financing transactions during the period

by examining a company’s investing and financing transactions , a financial
statement reader can better understand why assets and liabilities changed
during the period
slide 2:
the operating activities category is the most important. It shows the cash
provided by company operations . this source of cash is generally
considered to be the best measure of a company’s ability to generate
sufficient cash to continue as a going concern.

Slide:3
For example , receipts of investment revenues (interest and dividends) are
classified as operating activities . like payments of interest to lenders.

So the question is Why are these considered operating activities? Because

companies report these items in the income statement where results of
operations are shown.

Slide 4
Operating activities- income statement items
Investing activities- changes in investments and long term assets
Financing activities- changes in long- term liabilities and stockholders’
equity
Cash in flows: from sale of common stock and from issuance of long term
debt ( bonds)
Cash outflows: to stockholders as dividends
To redeem L-T debt or reacquire capital stock