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Cash flow statement vs income statement

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What makes the cash flow statement more useful in these respects than the income statement?

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Solution Summary

The answer contains the meaning of cash flow statement and also superiority of cash flow statement over income statement.

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What makes the cash flow statement more useful in these respects than the income statement?

A cash flow statement is a financial statement depicting amount of incoming and outgoing money during a particular time period. The statement does not include non-cash items like depreciation. Therefore, cash flow statement is useful for determining the short-term ability of a company to meet its liabilities.

It consists of the company's cash receipts and cash disbursements over a period of time. It also lists cash to and cash from operating, investing, ...

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