How do you prepare a cash flow statement?

The cash flow statement is prepared by taking the net income figure from the income statement and adjusting it for all non-cash expenses such as depreciation. Changes in working capital are also adjusted to arrive at net cash flow from operations.

What are the three sections of a cash flow statement?

The Cash Flow Statement has 3 sections: Cash Flow from Operations, Cash Flow from Investing, and Cash Flow from Financing. It’s nearly always presented in this exact order. At the end, it adds up all the cash flows to show the overall Net Change in Cash.

What is a cash flow statement?

The purpose of a cash flow statement is to provide a detailed picture of what happened to a business’s cash during a specified period, known as the accounting period. It demonstrates an organization’s ability to operate in the short and long term, based on how much cash is flowing into and out of the business.