Building a Cash Flow Statement from Scratch - Finance Interview Guide

💰The cash flow statement is an essential tool in finance, providing insights into a company's liquidity and financial health.

📊Operating activities involve cash flows related to a company's core business operations, such as revenue, expenses, and working capital changes.

🏢Investing activities include cash flows from buying or selling assets, like property, plant, and equipment, or investments in stocks and bonds.

🏦Financing activities involve cash flows related to raising capital, such as issuing equity or taking on debt, and paying dividends or repurchasing shares.

💼Creating a cash flow statement is a common interview question in finance, demonstrating understanding of financial statements and analysis skills.

What is a cash flow statement?

—A cash flow statement tracks the inflows and outflows of cash in a company, showing how cash is generated and used over a specific period.

Why is a cash flow statement important?

—A cash flow statement provides insights into a company's ability to generate cash, meet its financial obligations, and fund future growth.

What are the main sections of a cash flow statement?

—The main sections of a cash flow statement are operating activities, investing activities, and financing activities.

What does the operating activities section include?

—The operating activities section includes cash flows from core business operations, such as revenue, expenses, and changes in working capital.

How do you calculate the cash flow from investing activities?

—The cash flow from investing activities is calculated by considering cash flows related to buying or selling assets, such as property, plant, and equipment.

00:00Learn how to build a cash flow statement from scratch using an income statement and balance sheet.

01:22Understand the different sections of a cash flow statement and their significance.

06:20Explore the cash flow from operating activities and how it reflects a company's core business operations.

07:12Learn about the cash flow from investing activities and its relevance in asset acquisition and investment decisions.

08:42Discover the cash flow from financing activities and its impact on a company's capital structure and funding sources.

13:23Review the process of calculating the ending cash balance and ensuring the cash flow statement balances with the balance sheet.