Cash Flow Statement

Definition - What does Cash Flow Statement mean?

A cash flow statement is a document that lists financial data related to the money that is coming in and out of a business. In the context of the law, financial data is important for taxation and business evaluation purposes. So, it is important for companies to have accurate cash flow statements so that they know exactly what kinds of profits or losses their business is making.

Justipedia explains Cash Flow Statement

Many businesses have more than one source of income. In other words, they have cash flows from multiple sources. For example, a furniture retailer may sell furniture and also own a furniture patent that it licenses out to furniture manufacturers and retailers for a royalty fee. Furthermore, it may be paid by marketing companies to sell ads inside of its store. All of these streams of income contribute to cash flow. The cash flow statement keeps track of all of these sources of income for legal and/or accounting purposes.

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