What is the primary purpose of a cash flow statement?

The primary purpose of a cash flow statement is to detail cash inflows and outflows over a period. This financial statement provides critical information regarding the liquidity of the organization, showing how cash is generated and spent within a specific timeframe. It categorizes cash flows into three main activities: operating, investing, and financing, which helps stakeholders analyze how well the company manages its cash position and fulfills its financial obligations.

In contrast, insights into sales performance generally fall under income statements, where revenue is highlighted, but not on the actual flow of cash. Outlining the company's assets and liabilities pertains to the balance sheet's function, which reflects the company's financial state at a point in time rather than its cash performance over a period. Summarizing operating expenses is typically part of the income statement and does not directly address cash movements. Therefore, detailing cash inflows and outflows provides a clearer picture of financial health, enabling better planning and decision-making related to cash management.