How to Read a Cash Flow Statement

A cash flow statement can have several key implications for investors, so here's what you need to know.

By Matthew Frankel, CFP – Updated Feb 18, 2025 at 1:42 PM

Key Points

Cash flow statements reveal money flow in/out of a business, divided into operations, investments, and financing.
Operating cash flow reflects the cash transactions from core business activities.
Free cash flow shows cash available after capital expenditures for reinvestment or returns.

There are three main financial statements all publicly traded companies are required to make available to shareholders -- the income statement, balance sheet, and cash flow statement. Of the three, the cash flow statement is perhaps the least understood by many investors.

In this article, we'll go through the basics of a cash flow statement, the information it contains, and how cash flow is calculated. We'll also go through a real-world example of how you can read and use the information from a cash flow statement.

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Cash Flow

Cash flow is how we measure the actual money flowing through a business that can sometimes be hidden behind complexities.

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Man reading documents looking confused. — Image source: Getty Images.

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Revenue

Revenue is a business’s gross income or the amount of money it brings in from regular operations before costs are considered.

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Apple Cash Flow Statement - Q1 2025 — Image source: Apple.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.