Equity · Core
Cash Flow Statement
The cash-flow statement splits period cash into operating, investing, and financing — the bridge from accrual earnings to the bank account.
Definition
CFO starts from earnings and adjusts non-cash items and working capital. CFI is capex, acquisitions, and securities. CFF is debt, equity, and dividends. The three sum to the change in cash.
Why it matters
You cannot pay coupons or buybacks with EBITDA. Cash-flow quality is how much of earnings shows up as CFO after maintenance capex.
Case
A ‘profitable’ retailer growing inventory faster than sales prints earnings and burns cash. The income statement is not the constraint; the revolver is.
How to read it
CFO minus maintenance capex is the first free-cash-flow draft. Then ask whether working-capital draws are cyclical or structural.
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