A statement of cash flows is a financial statement that provides a summary of the cash inflows (receipts) and outflows (payments) of a business during a specific period of time, typically a quarter or year. It categorizes these cash flows into three main sections:

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Operating Activities

This section includes cash transactions related to the core business operations, such as cash received from customers and cash paid to suppliers and employees.

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Investing Activities

This section covers cash transactions for the purchase and sale of long-term assets, such as property, equipment, and investments in securities.

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Financing Activities

This section includes cash transactions with the company's owners and creditors, such as borrowing money and repaying loans.

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The statement of cash flows helps business owners understand how a company generates and uses cash over a period.  It can provide insights into the liquidity, solvency, and overall financial health of the business. It complements the income statement and balance sheet by focusing specifically on cash transactions rather than accrued or non-cash items.

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