Cash flow analysis

Cash flow analysis or cash flow statement is a statement of a company's liquidity. A cash flow analysis includes inflows and outflows and will end in a measure known as the cash flow.

Cash flow is cash receipts less cash payments. Larger companies are obliged to prepare a cash flow statement in their annual report.

A cash flow statement includes the following:
cash flow from operations
cash flow from financing
cash flow from investments

In an equity valuation context, the measure often used is free cash flow. Free cash flow is unlike profits, not manipulated by accounting rules.

Free cash flow consists of:
cash flow from operations and cash flow from investments

Free cash flow is used in the calculation of shareholder value and to calculate an equity value.