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Purpose and benefits

In their annual report, most public companies must publish a cash-flow statement—together with the profit and loss account and a balance sheet. As the name suggests, the purpose of a cash-flow statement is to explain the movement in cash balances or bank overdrafts held by the business from one accounting period to the next.

The balance sheet shows the assets and liabilities at the end of the period, with comparative figures for the start of it. The profit and loss account shows how much profit was generated by the business in the period. The cash-flow statement is the third part of the financial picture of the business over the period.