What information does a cash flow statement provide?

The cash flow statement is a crucial financial document that provides a clear picture of how cash is moving in and out of a company over a specific period. It focuses exclusively on cash transactions, distinguishing between cash inflows (such as cash received from sales, investments, or financing) and outflows (like payments made for operations, investments, or servicing debts). By detailing these cash movements, the cash flow statement helps assess the liquidity and financial health of a business, enabling stakeholders to understand how well the company manages its cash to meet obligations and fund growth.

In contrast, the other options focus on elements that are not the primary purpose of the cash flow statement. Stock performance is more related to market valuation and investment potential, while profit margins are derived from the income statement reflecting profitability rather than cash flow. A breakdown of company debts may be included in the balance sheet or notes, but these details do not represent the flow of cash itself as analyzed in the cash flow statement.