In this video you will learn more about how to read the cash flow statement. At the end of the cash flow statement, you will receive the free cash flow. The amount of free cash flow determines how much of the profit generated at the end of an economic period is available to a company for dividend payouts, share buybacks or debt repayment. For many professional investors, free cash flow is more important than net profit. This is largely due to the fact that free cash flow is almost impossible to manipulate compared to net income.
Reading a cash flow statement can be challenging. This is because it is a financial report that deals primarily with the management of cash and other liquid assets. However, it is an important report that shows how well a company is able to meet its payment obligations and how it uses its financial resources.
It is important to note that a cash flow statement is only one part of a company's overall picture. The balance sheet and income statement are also part of the “financial statements” that should also be considered to get a complete picture of the company.
