How to Read and Interpret Cash Flow Statement

A cash flow statement is a financial report that shows actual incoming and outgoing money the company has incurred actual cash transaction during a particular period (quarterly or yearly), in other words, Cash Flow Statement only take into account actual money moving in and out of a company but income statement also takes into account some non-cash accounting items such as depreciation.
Almost all companies use the accrual basis for accounting. In accrual basis accounting expenses are recognized when they are incurred and income is recognized only when the sale is completed. Cash Flow Statement use cash basis accounting instead of accrual basis accounting, which means revenue is not counted until the cash is received and expenses are recognized when the cash is paid out
The cash flow statement has three session namely operating, investing and financing session, each session record cash inflow and cash outflow under that particular activities such as received cash from sale of goods captured under cash inflow in "Operating Cash Flow" session, pay employees for their services recorded under cash outflow in "Operating Cash Flow" session.