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  The Statement of Cash Flows     

Referencing this week’s readings and  lecture, describe the following terms as they relate to the statement of  cash flows: cash, operating activities, investing activities, and  financing activities. What can creditors, investors, and other users  glean from an analysis of the statement of cash flows?

Respond to at least two of your classmates’ posts.



Operating  activities within a cash flow statement include a company’s business  ventures that provide income which can be the money it made from selling  their products and services and the money they have going to their  expenses which is considered cash. Investing activities within a cash  flow statement represent the money earned or lost in the stock market or  from selling fixed assets which can include lending or collecting money  from loans. Financing activities “account for external  activities that allow a firm to raise capital. In addition to raising  capital, financing activities also include repaying investors, adding or  changing loans, or issuing more stock” (“Cash flow from financing  activities”, 2018). All of these aspects are important within the cash  flow statement because it shows a company where all their money went to  and it helps to accurately prepare a financial statement.

An organization’s cash flow “can be spent in various  activities, among them investing activities to help the company grow.  Mergers or acquisitions, major improvements to existing buildings or  upgrades to existing factories and equipment. Purchase or sale of  marketable securities, property, plant, and equipment” (“Elements of a  cash flow”, week 4 lecture). Banks use cash flow statements to determine  if a company is worthy of a loan short and long term. Cash flow  statements are vital to investors because it shows the amount of cash  (net cash) a company has left after all transactions have been  completed.


(2018). Elements of a cash flow. Retrieved from https://www.investopedia.com/terms/c/cashflowfromfinancing.asp

Elements of a cash flow. Week 4 lecture. Retrieved from https://ashford.instructure.com/courses/21789/pages/week-4-weekly-lecture



The  statement of cash flows shows how much money flowed in and out of a  company during a reporting period. Managers should review the inflow and  outflow on the statement of cash flows to notice if they have a cash  flow problem (Epstein, 2014). Operating activities include activities  that generate cash inflows from the sales of product or services. It  also includes activities that generate cash outflows from payments to  suppliers, employees, or other expenses. Investing activities include  the amount of cash a company has spent on investments. It includes  information about sales from long-term assets such as new equipment or  if the company used cash to purchase long-term assets. It also provides  information on cash the company spent on investing activities such as  renovations or upgrades. Financing activities consists of activities  that can change the value of a company’s shares. It also include  activities the company uses to pay down debts.

The statement of cash flows provides creditors, investors, and other  users with a more accurate picture of a business performance throughout  the reporting period. It can help them identify cash flow problems and  opportunities they can help a business improve its cash flow. The  operating activities can provide them with analysis of how much cash a  company has generated and how well cash is inflowing that can eventually  benefit its shareholders.


Epstein, L. (2014). Financial decision making: An introduction to  financial reports [Electronic version]. Retrieved from  https://content.ashford.edu/



Required Resources


Epstein, L. (2014). Financial decision making: An introduction to financial reports  [Electronic version]. Retrieved from https://content.ashford.edu/

  • Chapter 4: Elements of a Statement of Cash Flows


Ford Motor Company. (2014). Ford Motor Company 2012 annual report (Links to an external site.)Links to an external site..  Retrieved from  http://corporate.ford.com/content/dam/corporate/en/investors/reports-and-filings/Annual%20Reports/2012-annual-report.pdf

Recommended Resources


Heakal, R. (2010, May). What is a cash flow statement? (Links to an external site.)Links to an external site. Forbes. Retrieved from http://www.forbes.com/2010/05/27/cash-flow-statement-personal-finance-securities-analysis.html


AccountingCoach. (2014). Cash flow statement (explanation) (Links to an external site.)Links to an external site.. Retrieved from http://www.accountingcoach.com/cash-flow-statement/explanation/1

  • Read Parts 1 through 8

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