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Accounting: Cash flow.

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Please help explain or simplify the following questions concerning cash flow analysis.

If there is a recent trend of negative cash flow, but the company's P&L statement is showing its running a profit, how can this be and how would you evaluate the state of the organization?

Explain why comprehending and managing cash flow is important for financial success.

Explain the benefits of cash-flow analysis and any problems that could arise if it is not conducted.

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CASH FLOW

If there is a recent trend of negative cash flow, but the company's P&L statement is showing its running a profit, how can this be and how would you evaluate the state of the organization?

A major part of accounting practice involves the use of the accrual concept. This concept allows expenses to be collated over different periods/years. The concept is applied to the Profit and Loss statement through apportionments and amortizations. In the profit and loss statement, expenses, which did not occur within the calendar year, would be allowed for in the current period. However, in the cash statement costs are only recognized when they occur in the current period.

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The problem deals with topics under accounting: cash flow analysis.

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Cash Flow Information & Present Value in Accounting Measurement

Please locate this document as needed for assignment.

Read the following ProQuest article: Munter, P. (2001, July). Using Cash Flow Information and Present Value in Accounting Measurements. The Journal of Corporate Accounting and Finance, 12(5) 53-56. Retrieved March 17, 2010, from ProQuest Database. (Document ID: 75198888). The article supports the Assessment Tools Discussion for this week.

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