Cashflow statements have three primary categories – cashflow from operations, cashflow from investing activities and cashflow from financing activities. Together these categories cover all the cash activities that take place. Breaking them into separate categories allows greater visibility into cash movement for business owners and other parties. When analysing a company’s cashflow statement each section needs to be considered as they all contribute to the overall change in cash position. The cashflow from the financing section usually follows the other two sections. 

Keeping track of cash inflows and outflows can be difficult so the cashflow statement is very important -it gives an overview of all cash movement in the previous month or quarter. To Learn more about frequent questions about cashflow read our previous blog on Cashflow Q & A 
Cashflow from financing activities gives an overview of all cash entering and leaving the business over a set period of time. It particularly relates to the cash activities which deal with debt and equity and focuses on how a firm raises capital and pays it back to investors. It includes cash that comes in by issuing stock or debt as well as cash paid out as dividends. 

A positive number is an indicator that cash has come into the company and this will boost its asset levels. On the other hand, a negative figure shows when the business has paid out capital such as paying off long term debt or paying dividends. It is important to recognise that negative overall cashflow isn’t always a bad sign if a company can generate positive cashflow from its operations.