What does a cash flow statement summarize?

A cash flow statement summarizes cash inflows and outflows over a specific period, typically providing insight into a company's liquidity and overall financial health. This statement breaks down the sources and uses of cash into three primary categories: operating activities, investing activities, and financing activities. By examining cash flows, stakeholders can assess how well the organization generates cash to meet its obligations and fund its operations, investments, and dividends.

This focus on cash movement distinguishes the cash flow statement from other financial documents. For example, a summary of revenue earned and expenses incurred relates more closely to an income statement, which measures profitability over a period but does not provide the specifics of cash transactions. Long-term liabilities and shareholder equity are emphasized on the balance sheet, showing the company's financial position at a specific point in time rather than over a period. Future financial projections and forecasts, while important for planning, do not reflect historical cash flows and are not within the scope of what a cash flow statement summarizes.