Cash-flow statement
How the cash-flow statement splits operating, investing and financing cash, how free cash flow is worked out, and what investors check.
What is Cash-flow statement?
The cash-flow statement shows how cash moved in and out of a company over a period. It is split into operating, investing and financing activities, and the three add up to the net change in cash. Because it tracks actual cash, it helps test whether reported profit is backed by money.
How it is calculated
Net change in cash = operating cash flow + investing cash flow + financing cash flow.
- Operating: cash from the core business, such as customer and supplier payments and tax.
- Investing: buying and selling property, plant, equipment and investments.
- Financing: borrowings and repayments, share issues and dividends paid.
Free cash flow = operating cash flow − capital expenditure (capex).
How Malaysian investors use it
Bursa-listed companies report cash flow in quarterly and annual reports. Investors often check whether operating cash flow covers capital spending and dividends, and whether a company leans on new borrowings to keep running. Trailing-12-month totals can smooth out a seasonal quarter.
Worked example: Company A
Hypothetical cash flows for Company A for one financial year, in RM million:
| Section | RM million |
|---|---|
| Operating cash flow | 45 |
| Investing cash flow (includes capex of 20) | (30) |
| Financing cash flow | (5) |
| Net change in cash | 10 |
| Opening cash | 25 |
| Closing cash | 35 |
Step by step: 45 − 30 − 5 = 10 net change; 25 + 10 = 35 closing cash. Free cash flow = 45 − 20 = 25.
Common mistakes
- Treating profit as cash. Credit sales can lift profit before the money arrives.
- Reading the net change alone. A positive total can hide weak operating cash flow funded by borrowing.
- Ignoring the investing section, which shows where capital is going.
Related terms
- Income statement – profit on an accrual basis, to compare with cash.
- Free cash flow – cash from operations after capital spending.
- TTM – the latest four quarters combined.
Where Finworld shows it
Finworld’s financial statements section presents cash flow with the income statement, balance sheet and ratios, in annual, quarterly and trailing-12-month views.
Frequently asked questions
Why can a profitable company run short of cash?
Profit is recorded when earned, not when cash is received. Slow customer payments, inventory build-up or heavy investment can drain cash.
Is free cash flow a valuation?
No. It is one lens on how much cash is left after capital spending, and should be read with other figures.
Where do dividends appear?
Dividends paid are normally shown under financing activities.
See how this fits into Finworld Software, or book a demo.
Finworld provides market education and research tools only. This is not investment advice. Market data is end-of-day.
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