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Cash flow from operating activities

What is cash flow from operating activities?

Cash flow from operating activities (CFO) is a measure of the amount of cash generated by a company's normal business operations. It is an important indicator of a company's financial health, as it shows the company's ability to generate consistent positive cash flow from its core business operations.

CFO is calculated by adjusting net income for items such as depreciation, changes in working capital, and changes in deferred tax. This calculation is typically presented in the statement of cash flows, a financial statement that provides a detailed analysis of a company's cash inflow and outflow. A positive CFO indicates that a company's revenues are sufficient to cover its operational costs, while a negative CFO may suggest the opposite.

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