Question

What is the importance of the statement of cash flows? Why would a financial manager be so interested in this statement?  

Answer 1

Financial statements of the company reflects the overall position of an enterprise which includes the imapct of both Cash as well as non cash transactions.

We cant get good idea about actual cash transaction without help of cash flow statement. It reflects the actual cash position of enterprise.

Thats why management also prefer the cash flow statement instead of financial statement. Apart from that, financial statements also includes many adjusutmnts if someone wants to know the actual liquidity status of the enterprise he will be unable to get the same from financial statements or fundflow.

Cash flow statement includes cash transaction empact majorly in three categories.

1) Cash flow from operating activities

2) cash flow from financing activities

3)cash flow from investing activities

Which clearly reflects the cash transactions and status of enterprise.