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Please no handwritten answers and provide reference if possible. Discuss how the statement of cash flows...

Please no handwritten answers and provide reference if possible.

Discuss how the statement of cash flows helps investors and creditors perform each of the following functions:

a. Predict future cash flows

b. Evaluate management decisions

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Answer #1

Answer:

The statement of cash flows helps the investors and creditors in the following ways:

1.) Predict future cash flows:

The statement of cash flows lists the cash receipts and payments for the company during year. Past cash receipts and payments are reasonably good predictors of future cash flows and can help investors and creditors take informed decisions with respect to the company.

2.) Evaluate management decisions:

The statement of cash flows explains and reports the source of cash for the management and also the use of the same. The investors and creditors can gain knowledge regarding managements actions and decisions regarding the section of cash also disposal of the same.

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