Cash flow is generally analyzed according to the company's three main activities:
Cash flow from operating activities
- Cash flow from operating activities includes those cash receipts and expenditures which result from the company's core sales and production activities.
- Operating activities are the main source of the company's profit, so they should also be the main source of cash.
Cash flow from investing activities
- Cash flow from investing activities include cash receipts and expenditures from acquisitions and sales of fixed assets and other investments (e.g., short term investments in securities).
- The profitable company strives for expansion and modernization of its production capacities. In the short term, such investing activities will cause an outflow of cash.
Cash flow from financing activities
- Cash flows from financing activities include cash inflows from loans and issuance of equities, as well as outflows related to debt repayments and dividend payments.
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