Undestanding statement of cash flow - your guide to stock investment

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Statement cash flow indicates how the cash position of the firm has changed during the period covered by the income statement. Understanding the statement cash flow can help you in stock investing. The statement of cash flows breaks down the sources and uses of cash into three components: operating, investing, and financing activities. From this, you can know how the company uses and gets its money, like:
• Are they using their money for expanding the business (investing activities) or not.
• How much money do they get from their operation (net income).
• How much money do they pay for their debt.
• How much money do they pay dividend.
By answering to those questions, we should know how the company is doing. Are they going to the right direction or not. If you think they are heading to the right direction, you might consider buying their stock.

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