The money trail is famously useful for crime investigators, but it’s also a handy tool for stock market investors. When valuing stocks, investors want to know not just how the company is doing (as indicated by the balance sheet), but also how the money has been spent and generated in recent months. This is where the cash flow statement comes in.

As its name suggests, the cash flow statement details a company’s cash-related activities within a given period. In other words, it shows how the cash moves within the company, particularly compared to net income (which is a non-cash figure). It takes into account investments, loans, dividend payments, buying and selling stocks, and overhead costs. As an investor, you will want to know how much cash came in, where it went, and how much of it stays in the company at the end of a set period.

Both incoming and outgoing cash is considered in the cash flow statement. Outgoing cash is reflected as a negative number, and cash flowing in is a negative number. These numbers are taken from another financial document called the balance sheet. The data is divided into three sections: operating, investing, and finance activities.

Cash obtained from operating activities includes net income, with adjustments for factors such as depreciation, amortization, and changes in working capital. In non-US companies, the information may be presented as the revenue with expenses such as salaries, purchases, and accounts receivable taken into account. Both formats will turn up the same number, which is the net operating cash.

The investing activities section shows the company’s spendings and earnings from investments. These include the sale or purchase of securities, capital expenditures, and mergers or acquisitions. Financing activities are the ways in which the company raises more cash, for example, by taking out loans or selling public stocks. It also includes cash paid out to investors (dividends) and cash used to settle debts.

The sum of the net cash from the three sections is known as the net change in cash. Simply put, it’s the amount by which the company’s cash has increased or decreased in the reporting period. It matters to potential investors because it tells them how well the money is being handled, and therefore how the company is likely to perform in the near future. It’s not the only indicator of financial health, but it’s vital for making short-term investment decisions.

It’s been called “the most anticipated IPO in history,” with a target topping $10 billion and a market value approaching $100 billion. Facebook’s imminent initial public offering—when a company first puts up stock for sale to the public—is set to become the biggest in history, dwarfing that of search engine giant Google and online retailer Amazon.

And Mark Zuckerberg isn’t the only one to benefit from his own IPO. Many experts agree that the “coming-out” will spur a series of IPOs from smaller companies that have prospered in Facebook’s wake, from game and app developers to marketing and social media firms.  Already, 109 companies are set to go public in 2012, many of which have delayed a 2011 IPO because of an uncertain market. As many as 300 more can file with regulators before year-end, according to the Global Corporate Client Group at Nasdaq.

Several companies have already made it big by riding the Facebook wave. Zynga, a game developer, gained huge popularity with the online game Farmville and has since come up with a handful of equally successful games.  Marketing companies have drawn in hordes of new clients by offering Facebook- and social media-centered strategies. Apps for photo sharing, bookmarking, and other services have also taken off.

The U.S. business climate itself is expected to benefit from the Facebook IPO. The surge in companies going public is a welcome change in the downward trend that has slowed the country in the past few years as a result of the financial crisis. From 2010 to 2011, listings on Nasdaq fell from 195 to 151 as investors lost confidence in the U.S. markets’ capacity to stay ahead of its debts. The rise in small but prosperous tech companies, many of them situated in California’s Silicon Valley, may bring back the investors who had earlier sought to put their money elsewhere.

That being said, the outlook for the U.S. stock market isn’t completely positive: some experts fear a tech bubble similar to the one that burst in 2000. Investors might become overly confident and support companies that simply do not have staying power. While some are fairly safe bets, many companies have a more radical premise that could go both ways. Of course, some welcome surprises have sprung up in the games and apps market, but social media has made for a much less predictable public. Most experts agree that while the market holds promise, investors should still proceed with caution as the IPOs start coming.

Penny stocks—stocks that trade for $1 or less, according to most definitions—are a popular way for beginners to get their feet wet in stock trading. Their appeal lies in the fact that they’re cheap, and therefore low-risk. But the low price only shields against the obvious risks, and what few people see is that poor regulation and sheer popularity has made the penny stock market a favourite target for scammers. In other words, it’s more risky than its traders tend to think.

A common type of penny stock fraud is called Pump and Dump, in which a group of speculators buys certain penny stocks in bulk and then spreads positive, often false news about the company, causing its value to go up. They then sell to unsuspecting investors, who snap it up for the high price before the scam is revealed.

Other scammers work the other way, in a system people have dubbed Poop and Scoop. Here, the speculators release negative news about a certain company, causing its stock prices to go down. They then buy up the stocks at the new price, then wait for the news to be discredited and for values to go up consequently. Others will short-sell the stocks before the false news is spread, and then make large profits by covering their positions at a higher price.

Penny stock fraud doesn’t always rely on false news. Brokers and industry insiders can also take advantage of knowing what’s going to happen before it becomes public. In this case, they take sizeable positions of the stock before the news breaks out. This is called front running, or “insider trading” if the perpetrators are insiders.

Insiders can also try to generate third-party interest in a stagnant or nonperforming stock in a technique called Circular Trading. They create multiple accounts, usually based overseas, and trade shares between accounts to make it seem like the stock is being actively traded. They can also do cross-trades with brokers, wherein they trade large amounts of stock outside the exchange records. Once this gets the market talking, they sell at a profit.

Unsurprisingly, much of these scams take place on the Internet. Forums and chat boards are a particularly large target, as they attract the most untrained and gullible investors. The Securities and Exchange Commission and other regulatory bodies now monitor the most popular resources for fraud. Of course, this is just the first line of defense—and investors themselves, experienced or not, are still responsible for trading knowledgeably and keeping protected.

Investors are increasingly starting to look outside the American stock exchange for a stable place to put their money. In the wake of the 2008 economic collapse, and the difficult recovery that followed, small emerging holding companies such as the Singapore Exchange (SGX) have risen to the fore, attracting people who no longer considered American business a safe haven. As a result, SGX stock prices continue their upward trend without watering down investors’ interest.

On a small scale, SGX isn’t immune to ups and downs, peaking and falling like any other firm. But the larger picture, which matters more to investors looking for long-term returns, shows consistent growth over the decades. As an example, the company’s net profit by the end of 2010 was $165.8 million, a 7% rise from a year earlier. The quarter before that, its net profit rose 3% to $77 million, and operating revenue went up 6% to $324 million. And although the weekly close rates are slightly down, figures show that that it has been consistently at SGD$7 (USD$5.80) per share or more (adjusted for dividends and splits) since it last peaked in October 2010.

The company’s revenues come from the securities and derivatives market, which account for 75% and 25% of its income respectively. it operates several divisions, each handling a specific market. These include SGX ETS, which handles global trading access and accommodates traders outside Singapore, and SGX DT and SGX ST, which provide derivatives and securities trading.

SGX has close to 800 listed companies, more than half of which are domestic. Chinese listings make up about a fifth of the total, and foreign companies, exclusion Chinese ones, account for a slightly smaller share. Its market capitalization is valued at more than SGD$650 billion (USD$540 billion). Its major shareholders include SEL Holdings, with a 23.45% share, Citibank Nominees Singapore with 15.81%, DBS Nominees with 7.85%, DBSN Services with 5.99%, and HSBC Singapore Nominees with 5.06%.

Although most investments come from the Asia-Pacific region, investment has picked up from other areas, notably in developed Europe and North America. Its recently expanded trading hours have certainly helped attract and keep transcontinental interest. SGX trades from 9am to 5pm with a break from 12:30pm to 2pm, but the nonstop trading scheme implemented in August 2011 will allow people to trade during this “lunch break.” It will also come in handy for those trading in other time zones, and allow investors to quickly respond to news flows.