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A firm’s Statement of Cash Flows shows a net increase in cash. The increase comes from...

A firm’s Statement of Cash Flows shows a net increase in cash. The increase comes from investing activities, and both operating activities and financing activities are users of cash. Discuss what the Statement can be telling you about the firm. If you are a lender, do you view this Statement positively?

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Answer #1

The net increase in cash in the statement of cash flow of a company represents that the company is able to generate cash by engaging in different operating, investing and financing activities throughout the period.

As a lender i will view this stament of cash flow positively, because the company is able to generate net cash flow from its operating, investing and financing activities.Since the company is positively generating net cash by engaging in  different operating, investing and financing activities there will be no liquidity or credit risk for the lender to get back its loan amount on time.

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