When analyzing companies, the focus is often on turnover and profit, but these figures do not always show how much money is actually available in the company. This is where a look at the cash flow statement comes in handy. It shows where a company's money comes from, what it is used for and whether the business operations are sustainable on their own. Here, investors can find out how the cash flow statement is structured, how it differs from profit and what to look out for when interpreting it.<\/p>\n\n\n\n
The cash flow statement, in German Cash flow statement<\/strong>, is one of the central elements of an annual financial statement, alongside the balance sheet and the income statement. It shows in a structured form, how much cash a company generates in a given period<\/strong> and how these funds are used.<\/p>\n\n\n\n In contrast to the income statement, the cash flow statement only considers actual cash flows, i.e. cash inflows and outflows. Accounting variables such as depreciation, provisions or receivables do not play a direct role here. This often makes the cash flow statement more transparent when it comes to analyzing the economic substance of a company<\/strong> to understand.<\/p>\n\n\n\n This can be particularly revealing for investors, as a positive annual result does not necessarily mean that the company also has liquid funds at its disposal. Similarly, a negative profit can go hand in hand with a stable cash flow, for example if high depreciation and amortization weighs on the book profit, but the operating business nevertheless generates solid income.<\/p>\n\n\n\n The cash flow statement can therefore provide an indication of this,<\/p>\n\n\n\n The cash flow statement therefore supplements profit and balance sheet figures with a further, often practical perspective on the financial situation and health of a company.<\/p>\n\n\n\n The cash flow statement is generally divided into three main areas, each of which represents a specific type of cash flow:<\/p>\n\n\n\n The sum of these three sections is the net cash flow. This is the change in cash and cash equivalents, which is reconciled with the opening and closing balances to ensure plausibility.<\/p>\n\n\n\n The cash flow statement enables the Classification of the financial stability of a company<\/strong>. It shows whether the company is in a position to cover its current expenses, make investments or meet financial obligations.<\/p>\n\n\n\n Why investors should pay attention to the cash flow statement:<\/p>\n\n\n\n The cash flow statement thus offers a supplementary view of the economic situation of a company, which can provide valuable information, particularly when valuing shares or bonds.<\/p>\n\n\n\n Private investors in particular who want to look beyond pure profit should pay attention to the cash flow statement. A high balance sheet profit alone is not very meaningful if there are hardly any liquid funds available at the same time. <\/p>\n\n\n\n\n
Structure of the cash flow statement<\/h2>\n\n\n\n
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This section shows how much money was generated by the company's core business, for example through the sale of products or services. Changes in working capital (e.g. inventories or outstanding receivables and liabilities) are typically also taken into account here. Operating cash flow is considered particularly important because it shows whether the company generates cash and cash equivalents from its own resources, regardless of financing measures or one-off effects. A consistently positive operating cash flow is a good sign of economic stability.<\/li>\n\n\n\n
This section lists where the company has invested money, for example in new machinery, real estate or investments in other companies. Proceeds from the sale of such assets are also included here. A negative investment cash flow is not automatically bad, but can indicate growth plans. The decisive factor is whether these investments create value in the long term.<\/li>\n\n\n\n
This refers to cash flows resulting from the raising or repayment of capital. These can be loans, bonds, share issues or dividend payments, for example. A positive cash flow in this area indicates that the company is financing itself externally. A negative cash flow here can mean that the company is repaying debt or distributing money to shareholders. Own Share buybacks<\/a> (share buybacks) fall into this category.<\/li>\n<\/ol>\n\n\n\nWhy is the cash flow statement important?<\/h2>\n\n\n\n
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Interpretation of the cash flow statement<\/h2>\n\n\n\n