Cash flow is essential and because of this it take many forms and can be measured in numerous ways. The following considers the usual methods of describing cash flow.
Operating activities include cash activities related to net income (revenues and expenses are included in net income).
Investing includes cash activities related to noncurrent assets. Noncurrent assets include (1) long-term investments; (2) property, plant, and equipment; and (3) the principal amount of loans made to other entities.
Financing includes cash activities related to noncurrent liabilities and owners’ equity. Noncurrent liabilities and owners’ equity items include (1) the principal amount of long-term debt, (2) stock sales and repurchases, and (3) dividend payments.