January 29th, 2008
Most Common Question Asked By Fundamental Investors….
A common question asked by those first learning about cash flow statements is "What does operating activities include?"
The first part of a cash flow statement analyzes a company’s cash flow from net income or losses. For most companies, this section of the cash flow statement reconciles the net income (as shown on the income statement) to the actual cash the company received from or used in its operating activities. To do this, it deducts from net income any non-cash items (such as depreciation expenses) and any cash that was used or provided by other operating assets and liabilities.
Its a tricky part to understand at first, but critical for any investor who wants to make money investing.