Important Components of a Cash Flow Statement

As per Accounting Standard 3 issued by ICAI, it is compulsory for the large business organisations to publish its Cash Flow statement along with its Financial Reports.

The CashFlow Statement consists of three essential Components-

Cash from Operating Activities-

The Cash Inflows under this section comprise of Cash receipts from Sale of goods, Cash receipts from Fees, commission, etc. The Cash Outflows on the other hand comprise of paying salaries to employees, cash payments towards, Income Tax, etc.

Cash from Investing Activities-

The Cash received by selling fixed assets like machinery, buildings, vehicles, etc. is classified as inflows under this head. Cash received due to sale of investments would also be a part of this section. If a business spends huge amount of cash in giving loans to others or investing in other projects, it would be classified as outflow from investing activities.

Cash from Financing Activitie-

Cash Inflows arrising from issue of shares, debentures and cash outflows from repayment of these financial instruments comes under this category.

Regards