Education Hub / Financial Statements
Module 10
The Cash Flow Statement (Following the Actual Money)
All figures are for a fictional company, "TechBeast Corp", and are illustrative.
Net income includes non-cash items (like depreciation and stock compensation) and accounting estimates. The Cash Flow Statement strips those out and shows how much cash actually went into or out of the company's bank account.
Interactive S-1 Example: Cash Flow
(Simplified: changes in working capital are left out.)
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
|---|---|---|
| Net Loss | $(55) | |
| Stock-Based Compensation (SBC) | $ 30 | |
| 1. THE HIDDEN COST: Paying employees in stock, not cash. | ||
| Depreciation & Amortization | $ 5 | |
| Net Cash from Operations | $(20) | |
| 2. OPERATING CASH: The cash actually burned running the business. | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Purchases of Property & Equipment | $(10) | |
| 3. CAPEX: Cash spent on physical things (servers, warehouses). | ||
| FREE CASH FLOW (Calculated) | $(30) | |
| 4. FREE CASH FLOW: Net Cash from Operations MINUS Capex. | ||
Tap or hover a numbered marker to see what it means.
Where to Look
- Arrow 1 (SBC): Companies pay employees in stock to save cash. It flatters the cash flow figure, but it dilutes shareholders once the company is public.
- Arrow 4 (Free Cash Flow): One of the most closely watched metrics. Positive free cash flow means the business funds itself; negative free cash flow means it is drawing down cash reserves or relying on new financing.