What does a cash flow statement report?

The cash flow statement is a critical financial document that provides insight into how cash is generated and utilized within a business during a specific timeframe, typically over a fiscal year or quarter. It highlights the inflows and outflows of cash, categorizing them into three primary activities: operating, investing, and financing. This comprehensive view allows stakeholders to assess the liquidity position of the business and understand how well it manages its cash to meet operating expenses and obligations.

By focusing on cash flow, this statement goes beyond simple profits or revenues reported in the income statement. It reveals how cash moves in and out of the business, indicating the company's ability to adapt to financial challenges, invest in growth opportunities, and support daily operations. This information is crucial for decision-making, as it ensures that there is sufficient cash available to sustain business activities, even if the company reports profits but struggles with cash management.

In contrast, the other options focus on aspects that the cash flow statement does not encapsulate entirely or correctly. For instance, while revenue is a critical measure of performance, the cash flow statement specifically reports on actual cash movements rather than strictly revenues. Similarly, limiting the report to cash from operating activities overlooks the comprehensive nature of the cash flow statement, which also includes investing and financing