1 Cash Flow: Introduction

In this video, I explain the structure of the cash flow statement with its 3 components:

  • Cash from Operations
  • Cash from Investing
  • Cash from Financing

I also explain that the cash flow statement does not take into account movements in debt and that these movements can be significant. A company like Amazon which uses finance leases to acquire much of its assets will report a FCF number which if based on the cash flow alone, will be overstated. It’s a little beyond the scope of this course to go into a lot of detail on this, but I shall explain the reconciliation of the opening and closing debt later.

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