Question

In: Economics

Explain the difference between a company's performance and its cash flow with figures

Explain the difference between a company's performance and its cash flow with figures

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Expert Solution

Financial statements are generated by companies which provides insight into their performance , stremgth, and stability. In order to get a clear picture of the company's financial and operational condition, it is necessary to look at income statement, balance sheet and cash flow statement.Cash flow statement gives a clear view of the stability of the company as it focusses on the cash of the company.A cash flow statement puts into record the sources and uses of cash that crops up  from operations, investing and financing.The cash flow statement shows how a company manages its expenses and liabilities.The cash flow statement gives owners, lenders , investors a view from the perspective of cash and shows  the effective manner in which the company delivers its performance.Small businesses should look into the cash flow statementat intervals since even a large company which makes profit can have negative cash flow and business failure.  In general,companies with high positive operational cash flow have high finnacial stability.A proper review of cash fow statement helps a company find out operational cash shortages which can be taken care of by financing and investing.In 2017, Apple had net income of $ 48.4 billion and cash flow from operating activities of $63.6 billion.


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