Glossary · Bookkeeping & QuickBooks term
Cash flow statement
The third core financial statement — it tracks the actual cash that moved in and out over a period, across operating, investing, and financing activities, and explains the gap between profit and the bank balance.
In plain terms
What cash flow statement means.
The cash flow statement (or statement of cash flows) is the third core financial statement, alongside the profit and loss statement and the balance sheet. It reports the actual cash that moved into and out of the business over a period, grouped into three activities: operating (the core business), investing (buying or selling assets), and financing (loans, owner contributions, distributions).
Where the P&L can show profit on accrual timing, the cash flow statement shows what actually hit the bank — reconciling net income to the real change in cash.
It explains ‘profitable but broke.’
Many businesses are surprised to be profitable on the P&L yet short on cash. The cash flow statement is where that gap becomes visible: profit tied up in unpaid receivables, inventory, loan principal repayments, or owner draws — none of which show on the P&L the way they hit the bank.
Lenders and investors read it closely, and it is the foundation of cash-flow forecasting — core advisory and fractional-CFO work. It only works on accurate, reconciled books.
Put it to work
Profitable on paper but cash is tight?
A Certified ProAdvisor reads your cash flow against your P&L to find where the money actually goes — and what to do about it.