Module I· Three-Statement Mechanics & LinkagesBasic
Question
What does the cash flow statement show?
Answer
Three sections
- Operating CF (OCF): cash from operations
- Investing CF (ICF): capex, acquisitions, asset sales
- Financing CF (CFF): debt, dividends, share buybacks
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Sum of the 3 sections + beginning cash = ending cash
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Important
The cash flow statement is the bridge between the accrual income statement and cash reality — and the most important statement for IB. Valuation and debt capacity are based on cash, not net income.