Learn in the textbookThe Big Picture of Financial Statements
DefinitionThe cash flow statement (キャッシュフロー計算書) is a financial statement showing how much cash, such as cash on hand and bank deposits, came in and went out over a period.
ExplanationCash movements are shown in three sections: buying and selling in the core business goes under operating activities, investment in equipment and the like under investing activities, and raising and repaying funds under financing activities. Even when sales have been recorded and a profit has been made, cash on hand has not grown until payment arrives (this uncollected amount is called accounts receivable), so a separate statement is needed to track cash apart from profit.
AnalogyIt is like taking a month of bank passbook entries and regrouping them into three totals: pay and living costs, buying or selling a car, and taking out or repaying a loan. You can see how much moved, and for what, in each group.
Memory hookCash plus flow: the name itself reminds you that this statement follows movements rather than capturing balances.