Why You Should Track Cash Flow Statement – Not Just P&L

Many retail investors only focus on Profit & Loss statement, but a company can show profits and still have poor financial health. The real story lies in the Cash Flow Statement. 🔹 Key Sections: Operating Cash Flow (OCF) – Shows real cash generated from core business Investing Cash Flow (ICF) – Cash used in CapEx, investments, acquisitions Financing Cash Flow (FCF) – Debt raised/paid, dividend payments, buybacks ✅ Focus on: Positive & growing Operating Cash Flow Free Cash Flow = OCF – CapEx → Should be positive If net profit is rising but OCF is negative = ⚠️ Low quality earnings 📌 Example: Company A reports ₹200 Cr net profit but -₹50 Cr OCF = Bad signal Company B reports ₹120 Cr net profit and ₹160 Cr OCF = Healthy, cash-generating business 🧠 As a Research Analyst, I always match net profit with cash flow before issuing any long-term stock call