The cash flow statement tracks how cash moves in and out of a business during a specific period, breaking activity into three categories: operating, investing, and financing. It is crucial for understanding liquidity and how a company funds its operations and growth. However, it is not designed to show profitability. For example, a company could have strong net income but poor cash flow if customers delay payments or if significant capital expenditures occur. Likewise, a business could have positive cash flow from financing activities while still losing money operationally. While the cash flow statement is essential for evaluating financial stability and resource management, profitability over time is best measured through the income statement, which details revenue, expenses, and net earnings.