Video: Operating, Investing, and Financing Activities

In this lesson, Nick Palazzolo, CPA, demystifies the statement of cash flows by breaking down its three fundamental sections: operating, investing, and financing activities. He delineates the typical inflows and outflows for each category, underscoring the usual patterns for a thriving business. Nick uses relatable examples such as Spotify's business operations to illustrate how companies raise capital, invest in assets, and earn revenue. He also clarifies common misconceptions, like why paying interest on debt is considered an operating activity, and navigates through the nuances of non-cash transactions such as depreciation and the equity method. With his clear explanations and emphasis on the practical aspects that need to be memorized, Nick sets the stage for a solid understanding of how cash flow statements reflect a company's financial health.