What does a statement of cash flows summarize?

A statement of cash flows summarizes the cash inflows and outflows from various activities within a company over a specific period. This statement is crucial as it provides insight into a company's liquidity and cash management by showing how cash is generated and used across operating, investing, and financing activities.

The operating activities section indicates the cash generated or used during the company's core business operations, while investing activities reflect the cash spent on or received from purchasing and selling long-term assets. The financing activities reveal the cash inflows and outflows related to obtaining or repaying capital, such as issuing stock or taking on loans.

This emphasis on cash movements is vital for stakeholders since it helps assess a company’s ability to maintain and manage its cash flow effectively, ensuring that it can meet its obligations and pursue growth opportunities.