Explain the purpose of the cash flow statement.

Question

Question

Answer 1

Answer #1

Purpose of Cash Flow Statement are as follows:-

It report cash receipts (inflows) and cash payments (outflows) during a period. It explains the difference between the ending and beginning cash balance.
The statement of cash flows also provides information about operating, financing, and investing activities. It reports cash receipts, cash payments, and net change in cash from all the activities i.e, impact on the cash flows and the effect on the overall cash balance of the company.
Helps to predicts future cash flows.
On the basis of cash flow statement management evaluates decisions.
Indicates where the company's cash comes from and how the company uses its cash.
The basic purpose of cash flow statement is to provide information about the cash receipts and cash payments for an entity to help investors, creditors, and others.

Please give a Thumbs up ?. Thanks!!

Add a comment

Answer 2

Similar Homework Help Questions

explain the purpose of the cash flow statement

explain the purpose of the cash flow statement
What is the purpose of a statement of cash flows? Please explain in your own words...

What is the purpose of a statement of cash flows? Please explain in your own words how the statement of cash flow can be helpful to a business. What are the (3) major sections on a statement of cash flows, and what type of cash inflows and outflows should be included in each of these three sections? Assume that a company repays a $300,000 loan from its bank, and then later in the same year they borrow another $500,000. In...
Since most companies use accrual based accounting, what is the purpose of the cash flow statement...

Since most companies use accrual based accounting, what is the purpose of the cash flow statement to a company's decision makers? Give a real life example.

Outline the differences between of a cash flow statement and a cash budget and explain why...

Outline the differences between of a cash flow statement and a cash budget and explain why a cash flow statement is important to the shareholders. Give reasons to support your answer
Outline the differences between of a cash flow statement and a cash budget and explain why...

Outline the differences between of a cash flow statement and a cash budget and explain why a cash flow statement is important to the shareholders. Give reasons to support your answer.
（650 words） Required: Explain the purpose of the cashflow statement and how such a statement might...

（650 words） Required: Explain the purpose of the cashflow statement and how such a statement might be used by investors and other users of financial reports. In your response you should include reasons why a company might report a negative cash flow position while the company is making a profit or, conversely, show a marked improvement according to the statement of cash flows but the statement of profit or loss for the same period shows a significant decline in reported...

1. Briefly explain the general purpose of each of the three financial statements (the income statement,...

1. Briefly explain the general purpose of each of the three financial statements (the income statement, the balance sheet and the cash flow statement) and the usefulness of each of them for Quartz Antique Furniture Ltd. (20 marks)
Describe (in details) the Statement of Cash Flow and explain how it reflects the activity and...

Describe (in details) the Statement of Cash Flow and explain how it reflects the activity and financial condition of a business?
1. Describe the difference between Net Income, Net Cash Flow (from cash flow statement) and Free...

1. Describe the difference between Net Income, Net Cash Flow (from cash flow statement) and Free Cash Flow. Explain why free cash flow is the most useful metrics for investors.

Statement of Cash flow :- 1) What does a Cash flow statement depict? What does it...

Statement of Cash flow :- 1) What does a Cash flow statement depict? What does it say about the company? ( positive and negative cash flow) 2) Analysis of cash flow statement: How does one know where the company is getting the cash from ? What is the company spending the cash on?