A cash flow statement shows how money actually moves in and out of your business during a specific period. It’s broken into three sections: operating activities (day-to-day income and expenses), investing activities (equipment or asset purchases), and financing activities (loans, repayments, or owner contributions).

For small business owners, reading this statement helps answer one key question: Can my business cover its bills and grow without running into cash shortages? Understanding where cash is coming from—and where it’s going—makes it easier to plan expenses, manage slow months, and avoid surprises, even if your profit looks healthy on paper.

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