Cash Flows - 1
CAS H FLOW STATEM ENT
On the statemen t, cash flow s are segregated based on source:
Operating activities: involve the cash effect s of transactions that
enter into the determination of net income.
Investing activities: conc ern with buying (and selling) property, plants,
and equipment (PPE); acquiring and disposing of
securities of ot her entities;
Financing activit ies: include issuance and reacquisition of a firm's debt
and capital stock, and divi dend payments.
• Operating cash flows information indicates the business' ability to
generate sufficient ca sh from its continuing operatio ns
• Investing cash flows information indicates how the business plans to
Information about financing cash flows illustrates how the business plans to
finance its expansion/reward shareholders.