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Statement of cash flows

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What information can a user of financial information obtain from the statement of cash flows and which method of reporting do you prefer? What are the three major activities presented in the statement? Provide examples of each of the activities.

Is it possible to have a positive net income and negative cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

Is it possible to have a negative net income and positive cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

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What information can a user of financial information obtain from the statement of cash flows and which method of reporting do you prefer? What are the three major activities presented in the statement? Provide examples of each of the activities.

A statement of cash flows provides information on the sources and uses of cash. The user can know from where the company has raised cash and where the cash has been deployed and what has been the change in cash. A business runs on cash and so the statement of cash flows provides information on the sources and uses, based on which the use can draw conclusion on how the business will perform in the future. For example if the firm has negative operating cash flow and positive financing cash flows this would mean that the operations of the firm are not generating cash and that the business is running by raising more cash. Such a situation implies that in future the firm may have problem in repaying the borrowings. Thus the statement gives some information on the financial health of the ...

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