The cash flow statement is one of the most important, but often overlooked, of a firm’s financial statements. In its entirety, it lets an individual, whether he or she is an analyst, investor, credit provider or auditor, learn the sources and uses of a company's cash. Without proper cash management, and regardless of how fast a firm’s sales or reported profits on the income statement are growing, a firm cannot survive without carefully ensuring that it takes in more cash than it sends out the door.

When analyzing a company's cash flow statement, it is important to consider each of the various sections that contribute to the overall change in cash position. In many cases, a firm may have negative overall cash flow for a given quarter, but if the company can generate positive cash flow from its business operations, the negative overall cash flow is not necessarily a bad thing.

Below, we will cover cash flow from financing activities, one of three primary categories of cash flow statements. (The other two sections are cash flow from operations and cash flow from investing activities. The cash flow from the financing section of the cash flow statement usually follows the operating activities and the investing activities sections.)


Source : Investopedia