Operating activities refer to the core functions of a business that generate revenue. These activities include selling products or services, managing inventory, and handling customer transactions. Essentially, they encompass all the day-to-day operations that keep a business running and profitable. In financial statements, operating activities are often detailed in the cash flow statement. This section shows how cash is generated and used in the normal course of business, highlighting the inflows from sales and the outflows for expenses like salaries and rent. Understanding these activities is crucial for assessing a company's financial health.