The change in cash is calculated as what?

The change in cash is correctly identified as the sum of cash from operating, investing, and financing activities. This approach is rooted in the structure of the cash flow statement, which is divided into three primary sections: operating activities, investing activities, and financing activities.

Operating activities reflect the cash generated or used in the primary business operations, such as cash sales and payments to suppliers. Investing activities involve cash movements related to asset purchases or sales, such as property and equipment. Financing activities encompass cash transactions related to raising or repaying capital, such as issuing shares or borrowing funds.

By summing the net cash flows from all three of these activities, one can determine the overall change in cash for the period. This holistic view provides a comprehensive understanding of a company’s cash position and liquidity based on its operational efficiency, investment decisions, and financing practices.

Other approaches, such as calculating net income multiplied by cash from investing or looking solely at cash inflows and outflows, do not capture the full spectrum of a company's cash movements throughout the reporting period. The annual cash flow rates, while potentially useful for trend analysis, do not directly calculate the change in cash for a specific period in the same way that the cash flow statement does.