Glossary · Defined term
Cash flow statement
A cash flow statement tracks the cash entering and leaving a company, split into operating, investing, and financing activities.
Last updated Oct 2, 2026
What it means
A cash flow statement is one of the three core financial statements, and it tracks the actual cash moving in and out of a company during a period. It is organized into three sections: operating activities, which covers cash from the core business; investing activities, which covers buying and selling long-term assets; and financing activities, which covers borrowing, repaying debt, and paying dividends.
The statement matters because profit and cash are different things. A company can report strong net income while struggling for cash if customers pay slowly, inventory piles up, or it is spending heavily. The operating cash flow section reconciles reported profit to cash, exposing the gap between accounting earnings and money in the bank. Public companies publish cash flow statements in their quarterly 10-Q and annual 10-K filings.
One of the most useful figures derived here is free cash flow: operating cash flow minus capital expenditures. It represents the cash a company generates after maintaining and expanding its asset base, and it is what funds dividends, buybacks, and debt repayment. Investors who focus only on earnings without checking cash flow can miss trouble brewing beneath the surface.
An example
For illustration, a company reports $100 million in net income but only $60 million in operating cash flow, because big customers paid late. The income statement looks healthy, but the cash flow statement reveals the strain.