What does the cash flow statement summarize?

The cash flow statement summarizes cash transactions over a certain period, providing insights into how cash is generated and used within a business. It is divided into three main sections: operating activities, investing activities, and financing activities. Each section details the inflow and outflow of cash, helping stakeholders understand a company's liquidity position.

This information is vital because it allows investors, creditors, and management to assess whether the company can generate sufficient cash to meet its obligations, fund its operations, or invest in growth opportunities. The focus on cash transactions is what differentiates the cash flow statement from other financial statements, like the income statement, which may include non-cash items and adjustments.