Measures profitability :
When looking at a cash flow statement, investors tend to look at the component of operating cash flows with the greatest interest.
The other two activities should ideally be financed in totality by operating cash flows. Investors don’t mind negative investing and financing flows as long as the figure for operating cash flows is positive and greater than the combined outflows on account of the other two. (Although negative values must be investigated further.)
If this is the case, it means that the company has raised enough money from its operations to finance its investments, as well as repay money to creditors and shareholders. Such a company must be doing rather well!
Cash flow forecasting :
In case operating cash flows are negative and investing cash flows are positive, it means the company has sold its assets to raise money for its ailing operations.
In extreme cases, it may even be facing prospects of a shutdown, and is therefore selling parts of its business to support its operations and repay capital.