The cash flow statement is arguably the most important of the three statements, because cash is the one thing accountants can't recharacterize. Net income is governed by accrual rules with broad management discretion. The balance sheet has goodwill that won't be impaired until management says so.

But cash either is in the bank or it isn't. When the income statement and the cash flow statement disagree, the cash flow statement is usually telling you the truth that the income statement is hiding. This is why Buffett, Munger, and most great investors look at cash before they look at earnings.

The cash flow statement is divided into three sections — operating, investing, financing — corresponding to the three things a company does with cash. Each section starts and ends with cash; the middle is the explanation of how the cash moved during the period.