Question

What are the three sections of the Statement of Cash Flows and what is the difference between and value of the information contained in each of these sections?

Answer 1

Answer:

Operating activities

Investing activities

Financing activities

Explanation:

The Statement of Cash Flow is divided into three sections: operating activities, investing activities and financing activities.

• Operating Activities: cash flows from operating activities details flows arising from the normal and regular business operating of the company. It includes items such as cash-based revenue, cash-based expenses, changes in working capital, etc.
• Investing Activities: cash flow from investing activities details flows spent on investment assets or earned from sale of investment assets. It includes cash spent on acquiring new plant and machinery, as well as cash realized from the sale of existing assets.
• Financing Activities: cash flows from financing activities details cash realized from capital providers as well as returns to them. It includes flows from new equity and debt issuance, dividends and interests paid to capital providers, etc.