MANAGEMENT

Detailed explanation-1: -Explanation: Cash-flow are important because financial health of the firm depends on its ability to generate sufficient amounts of cash to pay its employees, suppliers, creditors and owners.

Detailed explanation-2: -Cash flows are important because the financial health of a firm depends on its ability to generate sufficient amounts of cash to pay its creditors, employees, suppliers, and owners. Only cash can be spent.

Detailed explanation-3: -The four main areas of financial health that should be examined are liquidity, solvency, profitability, and operating efficiency. However, of the four, perhaps the best measurement of a company’s health is the level of its profitability.

Detailed explanation-4: -Profit is a major indicator of overall business success, whereas cash is needed to keep and operate the business on a daily basis successfully. It is important to mention that, over the long term, a lack of profit exerts a negative impact on the cash flow of the company.

Detailed explanation-5: -Cash flow management means tracking the money coming into your business and monitoring it against outgoings such as bills, salaries and property costs. When done well, it gives you a complete picture of cost versus revenue and ensures you have enough funds to pay your bills whilst also making a profit.