in summation of your discussion, the components of the statement of cash flows show how management is spending cash. Interpreting the statement of cash flows includes examining fundamental relationships such as cash-generating efficiency and free cash flow. Cash-generating efficiency, which focuses on net cash flows from operating activities, and it is the ability of a company to generate cash from operations.

According to Brigham and Erhardt (2016), the statement of cash flows shows the effect on cash and cash equivalents of the operating, investing, and financing activities of a company for an accounting period. Cash equivalents are short-term, highly liquid investments such as money market accounts, commercial paper (short-term notes), and U.S. Treasury bills.

The cash flow statement of a business is often misunderstood and confused with the income statement or the profit and loss statement. A cash flow statement illustrates the actual flow of money through the company and how much cash is available to pay expenses each month. It may be more descriptively called a report of sources and uses of cash. Why are short-term investments (such as marketable securities) not considered cash equivalents in your opinion?