The Cash Flow Statement

Operating, investing, financing

~25 min · 6 lessons

What you'll learn

✓Read a cash flow statement
✓Explain why cash != profit

Lessons

💸
Profitable, and Broke
Why net income can lie to you
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Three Buckets of Cash
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From Net Income to Cash
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Free Cash Flow
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The Enron Tell
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Final Boss: Cash Tells the Truth
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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

FASB Accounting Standards Codification 230, Statement of Cash Flows
Financial Accounting Standards Board · institutional
Authoritative US GAAP source for the three-section structure and the direct vs indirect choice.
https://asc.fasb.org/topic/topic&trid=2127039
IAS 7, Statement of Cash Flows
IFRS Foundation · institutional
International equivalent of ASC 230, used outside the US. Same three-section structure.
https://www.ifrs.org/issued-standards/list-of-standards/ias-7-statement-of-cash-flows/
Apple Inc. Form 10-K, fiscal year 2023
U.S. Securities and Exchange Commission (EDGAR) · institutional
Source for the FY2023 operating cash flow, capex and free cash flow figures used in lesson 4.
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000320193&type=10-K
Investment Valuation, Aswath Damodaran
Wiley · book
Reference for the role of free cash flow in valuation and the variants FCFF and FCFE.
Principles of Corporate Finance, Brealey, Myers, Allen
McGraw-Hill · book
Standard textbook for the indirect method walk and working capital adjustments.
The Smartest Guys in the Room, Bethany McLean and Peter Elkind
Portfolio (Penguin) · book
Narrative source for the Enron case study used in lesson 5.
Enron Corp. 10-K filings, fiscal years 1999, 2000, 2001
U.S. Securities and Exchange Commission (EDGAR) · institutional
Primary filings showing the divergence between reported net income and operating cash flow before the 2001 collapse.
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001024401&type=10-K
SEC v. Enron Corp. and related litigation releases
U.S. Securities and Exchange Commission · institutional
Official record of the accounting issues at Enron that motivate the lesson 5 framing.
https://www.sec.gov/litigation/litreleases/lr17762.htm