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In today's video, we will discuss Decoding the Cash Flow

Statement: Operating, Investing, and Financing Activities.

The cash flow statement is a financial statement that presents the cash inflows and outflows of
a company during a given period.

It helps assess the company's ability to generate and manage cash, which is crucial for its
operations and growth.

Operating Activities
Operating activities represent the cash flows directly related to a company's core operations.
Let's explore some key aspects of operating activities.
● Cash from Sales
Cash received from sales of goods or services is a significant inflow in the operating activities
section.
It reflects the cash generated from the company's primary revenue source.
● Cash Paid to Suppliers and Employees
Cash payments made to suppliers for Inventory, Raw materials, Services, Salaries and wages .
● Interest and Taxes Paid
Cash paid for interest expenses and income taxes are included in the operating activities
section.

Changes in working capital

This section captures the cash inflows or outflows resulting from changes in the company's
working capital accounts over a given period, typically a fiscal year.

Investing Activities
Investing activities represent the cash flows related to the acquisition or disposal of long-term
assets and investments. Let's discuss some key elements of investing activities.
● Capital Expenditures
These expenditures reflect the company's investments in long-term assets to support its
operations or future growth.
● Proceeds from Asset Disposals
Cash inflows from the sale of long-term assets, such as Equipment AND Property.

Financing Activities
Financing activities represent the cash flows related to the company's capital structure and
funding sources. Let's explore some key components of financing activities
● Repayment of Debt or Dividends
Cash outflows for the repayment of debt or the payment of dividends to shareholders are part of
the financing activities section.
● Share Buybacks
Share buybacks reduce the number of outstanding shares and can indicate the company's
confidence in its own value.
Analyzing the cash flow statement provides insights into a company's Cash position, Cash-
generating abilities, and apital structure.

In conclusion, Evaluating the balance between investing and financing activities helps assess
the company's investment decisions and financial leverage.

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