InvestorQ : How can we interpret the cash flow statements as a whole?
Crowny Pinto made post

How can we interpret the cash flow statements as a whole?

sara Kunju answered.
3 years ago
The idea is to take a combined view of the cash flows from operations, financing and investing. Now let us put all these 3 items together. What are we trying to understand the company? The combination of these 3 components is all about gauging your actual cash on hand. It is all about how the cash is coming into the business and how the cash is going out of the business. What it tries to understand is how the 3 components are interacting. How are the capital investments of the company being financed? The most preferred situation is when the capital expenditure is financed either entirely or substantially through operating cash flows. That will reduce the pressure on raising money through financing and leave greater room for rewarding shareholders with higher dividends. Cash flows, effectively, force the company to reveal a true and credible picture of the company’s financial health. That is why the cash flow statement of the company is called the mirror of the health of a company. Some things get hidden in the income statement and some things can get hidden in a balance sheet. But the cash flow statement is very hard to manipulate and normally gives the most transparent picture of the actual health and the sustainability of the business.