Question

Why cash flow is important for business give example how it works in business?

Answer 1

Cash flow is important in the business

Working capital is needed in the business to meet the day to day operations, cash flow statement depict the cash flow of a business,

for a business a non cash transaction can be happen and it may lead to reduced cash flow to the company and it will may often lead to bankruptcy , for the purchase of asset, meeting tax burden, paying of dues and any other obligation cash is required, so cash flow is a vital requirement in a business environment.

Appropriate action in debt policy will reflect a good cash flow in the future.