A cash flow statement is a financial document that shows how cash moves in and out of a business over a specific period. It helps stakeholders understand the company's liquidity, indicating whether it can meet its short-term obligations. The statement is divided into three main sections: operating activities, investing activities, and financing activities. Operating activities reflect cash generated from core business operations, while investing activities show cash used for investments in assets. Financing activities detail cash flows related to borrowing and repaying debt or equity transactions. Overall, the cash flow statement is essential for assessing a company's financial health and operational efficiency.