The statement of cash flows breaks down a business's cash inflows and outflows into operating, investing, and financing activities. These totals are combined to calculate the net cash flow for the year, which is then added to the opening cash balance to find the closing cash balance. Cash flow, not profit, is the true measure of a business's value because cash is tangible, while profit is a theoretical concept. The quality of earnings shows how well a business is turning profits into cash, its vulnerability to short-term risks, and the reliability of its accounting numbers.