Cash Flow Statement
Definition
The Cash Flow Statement is a financial disclosure document that reflects the amount of Cash that comes in (for instance, equity dividends, loan proceeds, cash collection on receivables, sales, or other revenues) and goes out (capital expenses, production expenses, selling and administrative expenses, payment of dividends, or other expenses) of an organization.
The formal name under IFRS reporting is Statement of Cash Flows
Usage
The cash flow statement reveals how much cash is needed and when that money is required by the organization within a period of time (on a backward looking basis).
Structure
The statement of cash flows provides information about the changes in cash and cash equivalents of an entity for a Reporting Period, showing separately changes from:
Direct versus Indirect Methods
- A method whereby major classes of gross cash receipts and gross cash payments are disclosed.
- In the indirect method profit or loss (reported in the Income Statement is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.
