BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Firms can easily run out of money, even while earning a profit
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Investors want to see positive cash flow before they lend money
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Managers / Owners can easily track the incoming and outgoing of cash within the business
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All of the above
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Detailed explanation-1: -Enables investors to use the information about historic cash flows of a company for projections of future cash flows on which to base their investment decisions. Shows the changes in the balance sheet, and helps in analysing the operating, investing and financing activities.
Detailed explanation-2: -A cash flow statement is a valuable measure of strength, profitability, and the long-term future outlook of a company. The CFS can help determine whether a company has enough liquidity or cash to pay its expenses.
Detailed explanation-3: -A cash flow statement is a financial statement that presents total data concerning complete cash inflows a business gains from its continuing progress and external financing sources, as well as all cash outflows that pay for trading activities and finances during a delivered time.
Detailed explanation-4: -Regardless of whether the direct or the indirect method is used, the operating section of the cash flow statement ends with net cash provided (used) by operating activities. This is the most important line item on the cash flow statement.