The cash flow statement tracks the actual movement of cash in and out of a business during a period. Unlike the income statement (which can include non-cash items), this statement shows real cash transactions.
It is divided into three sections: operating activities (cash from core business), investing activities (buying/selling assets), and financing activities (loans, equity, dividends).
A company can be profitable but still run out of cash — which is why this statement is so important. It answers the critical question: "Where did the cash come from, and where did it go?"