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Cash flow statement-importance to managers & investors

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Why has the statement of cash flows become so important for managers, investors, and/or accountants?

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Solution Summary

The answer contains the meaning of cash flow statement and its importance to managers,investors and accountants.

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Dear student,
Why has the statement of cash flows become so important for managers, investors, and/or accountants?

Meaning of statement of cash flows:
Statement of cash flow shows the movement of cash from operating, investing and financing activities of the company. It shows the short term solvency of the company. It shows the company's flow of cash both inflow of cash and cash equivalents and outflow of cash and cash equivalents.

Importance of cash flow statement to managers and accountants:
Cash flow statement shows the ability of the firm to be solvent in the short term. Managers and accountants can use the cash flow statement for the purpose of ...

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