A financial statement that tracks the actual movement of money in and out of a company during a specific period. It shows where cash came from and where it went, divided into three categories: operating activities (business operations), investing activities (buying or selling assets), and financing activities (borrowing or repaying loans). A company can be profitable on paper but still run out of actual cash.
A software company had $5 million in profit last year (income statement), but its cash flow statement reveals only $2 million in actual cash came in. The difference occurred because customers owed the company $2 million that they hadn't paid yet, and the company spent $1 million buying new office equipment.
Greater Fool is a free Chrome extension that explains terms like this in place. Highlight a word on any page, click Explain, keep reading.
Add to Chrome (free)