How is the statement of cash flows usefulnand who is likely use this statement?

Solutions

Expert Solution

The cash flow statement or statement of cash flow is an indicator of a business cash inflow and outflow. It breaks down these cash flows into three categories: operating activities, investing activities, and financing activities.

Following are some uses of Cas Flow statements:-

To evaluate the cash position of a firm
A projected cash flow statement can be prepared in order to know the future cash position of a concern so as to enable a firm to plan and coordinate its financial operations properly.
Cash flow statement helps in planning the repayment of loans, replacement of fixed assets and other similar long-term planning of cash.
Cash flow statement provides information of all activities classified under operating, investing and financing activities.

Now as far as who is likely to use cash flow statements it can be used by following:

By any Business entity to know the cash position of the business as explained in above bullets.
It can be used by Financial Institute like Banks or Investing companies to evaluate the financial viability of its customers or any investing opportunity.
By shareholders of the company as it shows the financial strength of the company.

Hope the above answer gives you an understanding of cash flow statements.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow...

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that report the cash generated and spent during a specific period of time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business. Three Sections of the Statement of Cash Flows: Operating...

Alternative Treatments of Items of the Statement of Cash Flows The statement of cash flows is...

Alternative Treatments of Items of the Statement of Cash Flows The statement of cash flows is intended to provide information about the investing, financing, and operating activities of an enterprise during an accounting period. In a statement of cash flows, cash inflows and outflows for interest expense, interest revenue, and dividend revenue and payments to the government are considered operating activities. Required: a. Do you believe that cash inflows and outflows associated with nonoperating items, such as interest expense, interest...

Use the balance sheet and income statement below to prepare a statement of cash flows for...

Use the balance sheet and income statement below to prepare a statement of cash flows for Valium’s Medical Supply Corporation. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.) VALIUM’S MEDICAL SUPPLY CORPORATION Balance Sheet as of December 31, 2018 and 2017 (in thousands of dollars) Assets 2018 2017 Liabilities and Equity 2018 2017 Current assets: Current liabilities: Cash and marketable securities $ 79 $ 78 Accrued wages and taxes $ 60 $...

The statement of cash flows

Question:The statement of cash flows classifies all cash inflows and outflows into one of the three categories shown below and lettered from a through c. In addition, certain transactions that do not involve cash are reported in the statement as noncash investing and financing activities, labeled d.a. Operating activitiesb. Investing activitiesc. Financing activitiesd. Noncash investing and financing activitiesRequired:For each of the following transactions, use the letters above to indicate the appropriate classification category.1. ____Purchase of equipment for cash.2. ____Payment of...

"Statement of Cash Flows" A Statement of Cash Flows is often one of the least used...

"Statement of Cash Flows" A Statement of Cash Flows is often one of the least used and understood of the key Financial Statements. However, it is a critical report to use when evaluating or analyzing a company. Showing where a company is receiving and using its cash - through Operations, Investing, and Financing - this report can be used to help evaluate liquidity, solvency, and financial flexibility. Analyze the key sections of the Statement of Cash Flows: Cash from Operations,...

The consolidated Statement of Cash Flows is prepared:Using the separated companies statement of cash flows...

The consolidated Statement of Cash Flows is prepared:Using the separated companies statement of cash flowsUsing last year consolidated statement of cash flowOnly the consolidated income statement and consolidated balance sheet are prepared but not consolidated statement of cash flowsUsing the current year consolidated income statement and the current year consolidated balance sheet.Using the current year consolidated income statement and two consecutive (current year and last year) consolidated balance sheets.

Problem #1 Statement of Cash Flows The following Statement of Cash Flows was prepared for the...

Problem #1 Statement of Cash Flows The following Statement of Cash Flows was prepared for the Baines Corporation. Walker Corporation Statement of Sources and Uses of Cash Year Ended December 31, 2017 Sources of cash Net income $111,000 Depreciation and depletion 70,000 Increase in long-term debt 179,000 Changes in current receivables and inventories, less current liabilities 14,000 $374,000 Uses of cash Cash dividends $ 60,000 Expenditure for property, plant, and equipment 214,000...

how do you do statement of cash flows

Forecast the Statement of Cash Flows Refer to the Medtronic PLC financial statement below. Use the...

Forecast the Statement of Cash Flows Refer to the Medtronic PLC financial statement below. Use the information to forecast Medtronic's FY2017 statement of cash flows. Medtronic plc Consolidated Statements of Income 12 Months Ended ($ millions) 2017 EST. Apr. 29, 2016 Net sales $35,864 $28,833 Costs and expenses Cost of products sold 11,151 9,142 Research and development expense 2,709 2,224 Selling, general, and administrative expense 11,538 9,469 Special charges (gains), net - 70 Restructuring charges, net 218 290 Certain litigation...

Statement of Cash Flows—Indirect Method The following statement of cash flows for Shasta Inc. was not...

Statement of Cash Flows—Indirect Method The following statement of cash flows for Shasta Inc. was not correctly prepared. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year. Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income $360,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 100,800 Gain...

Subjects