Question

What can a financial statement user learn from analyzing the operating statement? Will this provide all the information necessary to understand the organization’s cash positions?

Answer 1

Part 1 - Explanation -

Operating statement is part of income statement of company.

Operating Statement summarizes all expenses and revenues for particular period excluding non operating items

Operating Statement shows Gross Profit also from which gross margin can be determined and operating profit as per operating statement is generally cited as EBIT (earning before Interest and Taxes)

Part 2 - No, cash flow can be better understood through analysis of cash flow statement.

Operating statements are prepared on accrual basis. They does not depict cash flow.