CASH FLOW STATEMENT

FOR BEGINNERS
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 1 What is the Cash Flow Statement?

AGENDA 2 Operating, Investing, Financing

3 Easy Excel Examples

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 What is the Cash Flow Statement?

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The Cash Flow Statement is one of the three core financial statements

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 4
CASH IS KING

Without adequate levels of cash

flow to pay for expenses,
interest, investments, and taxes,
a company cannot survive

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Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 6
Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 7
Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

Operating Cash Flow

Cash generated (spent) from the
delivery of regular goods or services

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 8
Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

Operating Cash Flow Investing Cash Flow

Cash generated (spent) from the
Cash generated (spent) from the
purchase and sale of assets and
delivery of regular goods or services
investments

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 9
Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

Operating Cash Flow Investing Cash Flow Financing Cash Flow

Cash generated (spent) from the
Cash generated (spent) from the Cash generated (spent) from debt
purchase and sale of assets and
delivery of regular goods or services and equity financing
investments

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 10
Cash Flow Statement Definition
Financial statement that reports a company’s actual cash
generated and spent over a period of time

Operating Cash Flow Investing Cash Flow Financing Cash Flow

Cash generated (spent) from the
Cash generated (spent) from the Cash generated (spent) from debt
purchase and sale of assets and
delivery of regular goods or services and equity financing
investments

Net Change in Cash

What is the Cash Flow Statement? Operating, Investing, Financing Easy Excel Examples 11
Cash does NOT mean Profit

Income statement (profit) embeds several non-cash expenses

and doesn’t include investments and financings

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Positive vs. Negative Cash Flow

Positive Negative
Allows company to: Does not necessarily imply the
- Reinvest into its operations company is unprofitable but usually
- Invest into CapEx signals one of the two:
- Settle debt payments - Company is spending more cash
- Pay equity holders via dividends than it is earning = TROUBLE
- Company is reinvesting heavily
Does not necessarily imply the back into its business or paying
company is profitable debt or equity holders

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 Operating, Investing, Financing

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Cash Flows from Operations

Cash generated (spent) from the delivery of regular goods or services

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Cash Flows from Operations

Cash generated (spent) from the delivery of regular goods or services

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Cash Flows from Operations

Cash generated (spent) from the delivery of regular goods or services

Operating cash flow indicates the level of cash profits from the core business

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Cash Flows from Investing

Cash generated (spent) from the purchase and sale of assets and investments

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Cash Flows from Investing

Cash generated (spent) from the purchase and sale of assets and investments

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Cash Flows from Investing

Cash generated (spent) from the purchase and sale of assets and investments

Investing cash flows are the engines that drive the growth of operating line items (revenue, EBIT, etc.)

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Cash Flows from Financing

Cash generated (spent) from debt and equity financing

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Cash Flows from Financing

Cash generated (spent) from debt and equity financing

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Cash Flows from Financing

Cash generated (spent) from debt and equity financing

Financing cash flows show how a company is funding its operations and investments

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 Easy Excel Examples

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Concluding Thoughts

1 Financial statement that reports a company’s actual cash generated and spent
over a period of time

2 Net Change in Cash = Operating + Investing + Financing Cash Flows

3 The Cash Flow Statement is the most important! It provides the clearest insight into
the true profitability of a company and its ability to continue paying its expenses

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Reminders

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