Understand Accounting concepts and Equation

Understand accounting equation

1. 1. Cash Flow from Operating Activities (CFO) The section’s top-line item is net income, which is adjusted by adding back non-cash expenses, such as D&A and stock-based compensation, and then adjusted for changes in working capital line items. 2. Cash Flow from Investing Activities (CFI) In the next section, investments are accounted for, with purchases of PP&E (i.e. capital expenditures, as the major recurring outflow), followed by business acquisitions and divestitures. 3. Cash Flow from Financing Activities (CFF) In the final section, the net cash impact of raising capital from issuing equity or debt from outside investors, share repurchases (i.e. buybacks), repayments of financial obligations, and the issuance of dividends are taken into account.