How to Evaluate a Cash Flow Statement

29 Jun 2010

Before, investing in a share, you need to evaluate the financial statement too. One of financial statement is cash flow statement. Carefully read this statement and analyze it. You can find the financial statement at company website or blog.

1. Read the statement of cash flow that contain three section, i.e: cash flow operation (CFO), cash flow investing (CFI) and cash flow operating (CFO). CFO describe on how much cash that company use to produce their product or service. CFI describe on how much cash the company invest. CFF is about stock or bond that company issues

2. See the operation section or segment. Has the company sufficient cash to support the business. From where they get the money?

3. Go to Investment section. Is the company invest some assets.

4. Some company issues stock and bond. You will see at CFF segment.

5. compare the current cash flow with previous year cash flow statement. You can get a description of cash flow performance.

6. You can compare too with the other company in same busisness.


TAGS financial statement financial statement analysis cash flow cash flow statement


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