What are the three activities measured in a cash flow statement?

The cash flow statement is a key financial document that provides insights into a company’s liquidity and cash management. It categorizes cash flows into three main activities: operating activities, investing activities, and financing activities.

Operating activities reflect the cash generated or used in the core business operations, including revenues from sales and payments to suppliers and employees. This section highlights how well the company can generate cash from its normal operational activities.

Investing activities involve cash flows related to the acquisition or disposal of long-term assets, such as property, equipment, and investments in other companies. This section helps investors understand how much a company is investing in its future growth through capital expenditures.

Financing activities include cash flows resulting from changes in the size and composition of the equity capital and borrowings of the entity. This may involve cash raised through issuing stock or bonds and cash paid out as dividends or loan repayments.

Therefore, the correct answer encompasses all three fundamental aspects of cash transactions that companies engage in, providing a comprehensive overview of their financial health and operational efficiency.