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Analyze to what extent a cash flow statement is essential in judging the financial performance of...

Analyze to what extent a cash flow statement is essential in judging the financial performance of a company
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Answer #1

A cash flow statement helps in judging following financial performance of a company
1. It helps in identifying the cash generated from its core operations which is the most important indicator regarding performance of a company.
2. Debtor will be focussed on cash flow to debt or bond holders.
3.Share holders will focussed on cash flow to shareholders.
4. It helps to understand the cash position of a company which is an indicator of liquidity in the firm.

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