What are the components of the Statement of Cash Flows?

The components of the Statement of Cash Flows are identified as cash flow from operating, investing, and financing activities. This classification is crucial because it separates the sources and uses of cash within a company across different operational aspects.

Cash flow from operating activities provides insights into how much cash is generated from the company’s core business operations. It reflects cash generated from sales and other routine activities, adjusted for changes in working capital.

Cash flow from investing activities covers the cash spent and received for long-term investments, such as the purchase or sale of property, equipment, and other investments. This component shows how much cash is being put towards the growth of the company or back into the economy.

Cash flow from financing activities illustrates how cash is raised or returned to investors. This includes cash raised from issuing stocks or bonds and cash paid out in dividends or to repay debt.

Collectively, these three categories enable stakeholders to assess the company's liquidity, financial flexibility, and overall cash position, facilitating better financial analysis.

The other choices focus on unrelated elements; for example, net income, taxes, and dividends primarily reflect profitability rather than cash movements, while revenue, expenses, and net profit are components of the income statement, and operating income, retained earnings, and capital out