Operations

• The operations aspect of a cash flow statement takes into account the normal business revenues and expenditures of your company. Cash flow from operations includes net income, depreciation of assets, accounts receivable and accounts payable. For most successful companies, the cash flow resulting from operations is the largest positive number on the cash flow statement. It reflects the ability of the company to sell its products or services and minimize expenses.
  
  

Investing

• When a company purchases real estate, machinery, equipment or intellectual property, this may count as an investment, because companies usually intend to use that purchase to make more money in the long run. However, in the short term, such investment activities result in negative numbers on a cash flow statement. Even if an investment will probably pay off in the long term, if it is too large, it may reduce the company's ability to meet its current financial obligations, resulting in financial instability or default.
  
  

Financing

• Financing activities that show up on a cash flow statement include debt financing, equity financing and the servicing of debts. For instance, if a company receives a loan or issues stock, either of these actions will result in an increase of cash flow. However, fees paid on debts owed and dividend disbursements to investors show up as negative numbers on the cash flow statement.
  
  

Preparing the Statement

• The cash flow from operations, investment activities and financing activities should appear as three distinct sections on your cash flow statement. The statement should also show the cash your company had at the beginning of the period, the total change in the amount of cash and the level of cash your company had at the end of the period.