STATEMENT OF CASH FLOW
Statement of Cash Flows
What is the purpose of the statement of cash flows? What information does it provide?
Explain why statements of cash flows are important when assessing the financial strength of an organization.
The following paper will discuss the purpose of the statements of cash flows and will analyze the importance of the information when assessing an organization’s financial strength. An organization needs to rely in different approaches to analyze performance and data to manage the productivity and strategies to succeed. In today’s economy, companies use software to help analyze the liquidity, cash balances, and study how the company made money and how it will keep making money in the future. The main purpose of the statement of cash flows is to arrange different data about the company’s liquidity and cash available during periods. The other purpose is to provide information about the company’s short term and long term transactions such as operating, investing, and financing activities. The statement of cash flows reports cash payments and changes reflecting from the company's operating, investing, and financing activities during a period. Its format reconciles the beginning and ending cash balances for the period. The statement of cash flows provides information to help investors, creditors, and others assess the ability to generate cash flow for the future. This helps the company asses the timing and amounts needed for future activities. Another factor for any company is to have the ability to meet the daily obligations and dividends to stockholders. It is important to know whether the company will have cash to pay employees, bills, dividends, or new equipment to continue doing business. The importance of the statement of cash flows is that an analyst may be able to determine the company’s strength by studying how the company makes use of it resources to stay on top of its competitors. The statement can also show how the money is
What is the purpose of the statement of cash flows? What information does it provide?
Explain why statements of cash flows are important when assessing the financial strength of an organization.
The following paper will discuss the purpose of the statements of cash flows and will analyze the importance of the information when assessing an organization’s financial strength. An organization needs to rely in different approaches to analyze performance and data to manage the productivity and strategies to succeed. In today’s economy, companies use software to help analyze the liquidity, cash balances, and study how the company made money and how it will keep making money in the future. The main purpose of the statement of cash flows is to arrange different data about the company’s liquidity and cash available during periods. The other purpose is to provide information about the company’s short term and long term transactions such as operating, investing, and financing activities. The statement of cash flows reports cash payments and changes reflecting from the company's operating, investing, and financing activities during a period. Its format reconciles the beginning and ending cash balances for the period. The statement of cash flows provides information to help investors, creditors, and others assess the ability to generate cash flow for the future. This helps the company asses the timing and amounts needed for future activities. Another factor for any company is to have the ability to meet the daily obligations and dividends to stockholders. It is important to know whether the company will have cash to pay employees, bills, dividends, or new equipment to continue doing business. The importance of the statement of cash flows is that an analyst may be able to determine the company’s strength by studying how the company makes use of it resources to stay on top of its competitors. The statement can also show how the money is