There are different activities undertaken through a business that prove to be either source or use of cash. These can be categorizes under three broad categories that are: investing activities, Financing activities and operating activities. A brief discussion of all of these categories is given below:

Operating  activities  comprise  cash  inflows  related  with  sales,  dividends  and interest  received  and  the  cash  outflows  related  with  operating  expenses comprising payments to  suppliers of  goods or  services, payments in the directions of wages, taxes and interest, etc. Increase or decrease in current assets, for illustration: receivables, inventory and also increase or decrease in current liabilities, for illustration: accounts payable, interest payable, wages payable, taxes payable also reflect operating activities.

Investing activities considered as to long life assets as land and building, plant and machinery and investments. Acquisitions of these assets involve cash outflow while their disposal means inflow of cash.

Financing activities encompass modifications in equity and preference capital, long term loans, debentures and same items. Issuance of equity, debenture and preference capital and also rising of long term loans imply cash inflow. Retirement of capital, redemption of debentures, bonus payments to shareholders, amortisation of long-term loans, conversely are related with cash outflow.