The last part of financial report is Cash Flow statement. No matter how good the asset, if the company cannot service its debt, the company will fall in default. From the cash flow statement, we can know if the cash is flow in or out of the company.
Cash Flow statement divided into 3 sections, namely, Cash Flows from Operating, Investing and Financing.
2. Cash Flow from Investing usually show negative, as the money spend to buy equipment or spend to maintain those equipment, we call them Capex or Capital Expenditures.
3. Cash Flow from Financing activities record down all the dividend payments or the company buy back it's shares. Here if negative is good for investor. However if the company issue shares or bond to have the positive cash flow, it's not good for investor as their share holding are diluted, unless the company able to demonstrate this will create share holder's value.
We are more interested to know what is the Free Cash Flow for the company. The formula for Free Cash Flow is Cash Flow from Operating minus Capex.
Free Cash Flow = Cash Flow from Operating - Capex