Question

It has been said that operating managers focus primarily on the income statement while financial managers focus primarily on the balance sheet. And some say the cash flow statement is the most important of these financial statements. What do you think? Do you think one is more important than the others? If so, which one and why? On the other end of the spectrum do you feel that all are equally important? Somewhere in between?

be sure that your post touches on all 3 financial statements

Answer 1

In my views all are equally important as balance sheet represent the financial position of a company at a particular point of time from which you can estimate the promoter investment, Net worth of buiness its payable against with its assets. If you want to purchase the company then this infomation is very helpful to make a decision however income statement tells you about the profit/loss (income - expense)of a particular year.

From Income statement you can estimate the reason of loss or profit by analysing the transaction.

However Cash flow tells you about the liquidity of a company that its liabilities can be met or not. Company are able to meet its short term liabilities or not. It is not like that the max. sales are on credit basis and buiness are not able to generate the sufficient cash flow to meet its short term obligation.

so in my view all are equally important.

Please comment in case of clarification required.