A cash flow statement (CFS) is one of the three primary financial statements (along with an income statement, also known as a profit and loss statement, and a balance sheet) that businesses prepare for a specific financial period, detailing how much cash was generated or used during that period.
When analyzing the financial performance of a business, a cash flow statement provides clarity about the true financial status of a company, at present. While income statements detail how much has been earned or spent in theory, not all transactions may have been settled at the time of the issuance of the statement. A cash flow statement details the actual amount of cash a business has on hand, helping to assess the liquidity of a business, i.e. the amount of cash available to be used, as necessary, which essentially determines how a business operates.
A cash flow statement is structured according to sources of cash: cash from operating activities, investing activities, and financing activities.