Importance of the statement of cash flows
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Explain why statements of cash flows are important when assessing the financial strength of an organization.
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The 244 word solution explains how readers use the statement, and how it has evolved over time. Also included is the classes of readers of the statement.
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A reader of a set of financial statements will be interested in the statement of cash flows because it segregates cash provided and cash used by operating, investing and financing activities. The 'bottom line' is important, of course, but what if much of the profit came from investing, rather than operating?
Granted that type of information is available other parts in the ...
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