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Cash Flow from Operations typically includes the cash flows associated with sales, purchases, and other expenses. Operating activities are the principal revenue-producing activities of the entity. Cash Flow DefinitionsĬash Flow: Inflows and outflows of cash and cash equivalents (learn more in CFI’s Ultimate Cash Flow Guide)Ĭash Balance: Cash on hand and demand deposits (cash balance on the balance sheet)Ĭash Equivalents: Cash equivalents include cash held as bank deposits, short-term investments, and any very easily cash-convertible assets – includes overdrafts and cash equivalents with short-term maturities (less than three months). Image from CFI’s Financial Analysis Fundamentals Course. Financing Activities: Any cash flows that result in changes in the size and composition of the contributed equity capital or borrowings of the entity (i.e., bonds, stock, dividends).Investing Activities: Any cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents.Operating Activities: The principal revenue-generating activities of an organization and other activities that are not investing or financing any cash flows from current assets and current liabilities.Three Sections of the Statement of Cash Flows: