Which financial statement indicates how cash flows in and out of a business?

The Statement of Cash Flows is the financial statement specifically designed to track the movement of cash within a business over a given period. It details how cash is generated from operating activities, how it is used in investing activities, and how it is affected by financing activities. This statement provides crucial information about a company's liquidity and overall cash management, allowing stakeholders to assess the business's ability to meet its obligations and sustain operations.

In contrast, the Balance Sheet presents a snapshot of a company's assets, liabilities, and equity at a specific moment in time, indicating what the business owns and owes but not how cash flows are managed. The Income Statement reflects the company's revenues and expenses over a period, showing profitability but not direct cash movement. Lastly, the Statement of Changes in Equity outlines changes in equity accounts, like retained earnings or stock issuance, without addressing cash flow dynamics. Thus, the Statement of Cash Flows stands out as the key document for understanding the influx and outflow of cash in a business.