If cash is king and cash is the bloodline of a company, then one ought to know how to read a cash flow statement. There is a saying that goes “Revenue is vanity, Profit is sanity and Cash is reality.”

This is the last series of the Beginners’ guide to getting started in investing. We have thus far talked about the income statement and the balance sheet. The final set is none other than the cash flow statement.

A cash flow statement measures how much cash is coming in and how much cash is going out. It is directly connected to the income statement and balance sheet.

Then you might ask, doesn’t the income statement tells us how much cash is coming in and going out? Nope, it doesn’t. Only the cash flow statement does.

That means the net income you see every year doesn’t mean it is cash.