Cash Flow Statement

Profit on the income statement includes non-cash items (like depreciation) and revenue that's been earned but not yet actually collected (accounts receivable) - so a company can report a healthy profit while its actual bank balance tells a very different story. The cash flow statement strips all of that out, tracking only real cash movement across three buckets: operating activities (day-to-day business), investing activities (buying/selling long-term assets), and financing activities (borrowing, repaying debt, paying dividends). A company with consistently strong operating cash flow, even during a quarter of modest reported profit, is often in a healthier position than one showing the reverse - strong paper profit but weak or negative cash from operations.