What is the use of a cash flow statement?

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The cash flow statement shows how cash moves in and out of the school district, which helps determine liquidity and the district’s ability to meet short‑term obligations. It separates cash activities into operating activities (cash received and paid for day‑to‑day operations like payroll, services, and grants), investing activities (buying or selling long‑term assets), and financing activities (borrowing, debt repayments, and other financing). This view matters because accrual-based financial statements can show income earned or expenses incurred without reflecting actual cash on hand; the cash flow statement reveals whether there is enough cash available now and in the near term to cover obligations like payroll, vendor payments, and debt service. While depreciation or taxes affect finances, the statement’s purpose is to track real cash movements rather than just recording non-cash items or tax totals.