How to Read a Cash Flow Statement and Its Impact on Investment - 주식 & ETF 전략 (Stock & ETF Strategy)

“This company made a profit last year—so why is the stock still falling?”

When I first started investing, this was one of the most confusing things I encountered.
The income statement showed a net profit, yet the stock price was dropping. There were no dividends, and the company’s cash reserves seemed low.

Then, I came across a line in an analyst report that changed everything:

“Accounting profits can be manipulated, but cash flow can’t be faked.”

From that day on, I began looking at the cash flow statement before the income statement.

Table of Contents

💸 What is a Cash Flow Statement?

Simply put, it shows how a company earns and spends its cash—like a bank statement for a business.
It breaks down into three parts:

1. Operating Cash Flow – Is the core business making money?

This section shows how much cash the company generates from its main operations.
For example, the money Coupang makes from selling products or LG Energy Solution earns from battery sales.

✔️ If this number is positive, the company is doing its job well.
❗ If it’s negative, even if there’s reported profit, actual cash might not be coming in.

2. Investing Cash Flow – Are they preparing for the future?

This tells you where the company is putting its money to grow—building factories, buying equipment, or acquiring other businesses.

💡 A negative here isn’t bad—it could mean the company is making strategic investments for long-term growth.

3. Financing Cash Flow – Where is the money coming from (or going)?

This section includes borrowing money, repaying debt, paying dividends, or buying back shares.

It shows whether the company is raising funds through loans or returning money to shareholders.

🔍 Let’s Look at Two Examples:

Company A

Operating Cash Flow: +50 billion
Investing Cash Flow: −40 billion
Financing Cash Flow: −10 billion

This company is earning money from its core business, investing in growth, and reducing debt.
That’s a healthy cash flow structure.

Company B

Operating Cash Flow: −30 billion
Investing Cash Flow: +20 billion
Financing Cash Flow: +10 billion

This company isn’t making money from its core business, is selling assets to cover cash needs, and borrowing money.
It might stay afloat for now—but the long-term outlook could be risky.

📈 Why It Matters for Investors

These days, I always check a company’s cash flow statement before investing.

Is operating cash flow consistently positive?
Is the company still investing in its future—or cutting back?
Are dividends coming from profits—or from new debt?

Looking at these questions helps you focus on how cash is earned, used, and retained—which is often more important than reported profit.

💡 Final Thoughts

Cash flow statements can feel intimidating at first, but once you get the hang of them, they offer clearer, more reliable insights than income statements.

After all, accounting tricks happen on paper—but cash never lies.

📌 In stock investing, it’s not the daily news that builds wealth—it’s the ability to evaluate a company’s true financial strength.
And for that, the cash flow statement is your best friend.

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