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Cash Flow Analysis

Cash flow is easy to understand. If you had $5,000 in your bank account on January 1, and only $1,000 on December 31, your cash flow for the year was a negative $4,000, regardless of how much income you reported to the IRS. Corporate accounting follows the same rules; only the numbers are bigger.

Interestingly, companies have been required to include cash flow statements with their financial reports only since 1987.


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