Starter Money skill
Read a cash flow statement
Read a cash flow statement by tracing operating, investing, financing, noncash, and foreign-exchange movements back to balance-sheet change.
Reconcile the cash movement before interpreting quality.
When to use
- Use with the income statement, balance sheet, notes, and comparative period.
- Do not equate positive operating cash flow with sustainable performance without reviewing timing and working capital.
Procedure
- Confirm entity, period, currency, accounting basis, consolidated scope, and opening and closing cash definition.
- Reconcile opening cash plus total movements to closing cash and the balance sheet.
- Separate operating, investing, financing, foreign-exchange, restricted-cash, and discontinued-operation effects.
- For the indirect method, trace net income adjustments for noncash items and working-capital changes.
- Identify cash from customers, suppliers, payroll, tax, interest, capital expenditure, acquisitions, debt, equity, dividends, and leases.
- Compare with prior periods, budget, seasonality, and balance-sheet movements.
- Flag one-time timing, factoring, delayed payments, asset sales, borrowing, classification changes, and missing disclosures.
- Summarize cash generation, use, financing dependence, and uncertainty without making investment advice.
--- name: read-a-cash-flow-statement category: money description: Read a cash flow statement by tracing operating, investing, financing, noncash, and foreign-exchange movements back to balance-sheet change. Use when explaining why cash changed during a reporting period. --- # read-a-cash-flow-statement Reconcile the cash movement before interpreting quality. ## When to use - Use with the income statement, balance sheet, notes, and comparative period. - Do not equate positive operating cash flow with sustainable performance without reviewing timing and working capital. ## Procedure 1. Confirm entity, period, currency, accounting basis, consolidated scope, and opening and closing cash definition. 2. Reconcile opening cash plus total movements to closing cash and the balance sheet. 3. Separate operating, investing, financing, foreign-exchange, restricted-cash, and discontinued-operation effects. 4. For the indirect method, trace net income adjustments for noncash items and working-capital changes. 5. Identify cash from customers, suppliers, payroll, tax, interest, capital expenditure, acquisitions, debt, equity, dividends, and leases. 6. Compare with prior periods, budget, seasonality, and balance-sheet movements. 7. Flag one-time timing, factoring, delayed payments, asset sales, borrowing, classification changes, and missing disclosures. 8. Summarize cash generation, use, financing dependence, and uncertainty without making investment advice. ## Done - A cash-flow review document reconciles opening and closing cash, classifications, major drivers, and statement links - Cross-statement checks verify working capital, debt, capital expenditure, noncash items, exchange, and comparative explanations