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The use of cash flows in business is very much in conjunction with the rest of the financial statements. Statement of cash flows enhance comparability as They are not affected by differing accounting policies used for the same types of transactions or events.
Cash flow information can be used as an indicator of the amount, timing and certainty of future cash flows.
Statement of cash flows are used by businesses as an indicator of a company's liquidity and solvency and also can be used to assess the entity ability to generate cash and cash equivalents as well as indicating the cash needs of the business.
used to asses timing and uncertainty of future cash flow, best measures of solvency comes from statement of cash flow
to see a company's sources of cash and uses of cash, over a specified time period.
The purpose of the cash flow statement or statement of cash flows is to provide information about a company's gross receipts and gross payments for a specified period of time.
The gross receipts and gross payments will be reported in the cash flow statement according to one of the following classifications: operating activities, investing activities, and financing activities. The net change from these three classifications should equal the change in a company's cash and cash equivalents during the reporting period. For instance, the cash flow statement for the calendar year 2013 will report the causes of the change in a company's cash and cash equivalents between its balance sheets of December 31, 2012 and December 31, 2013.
In addition to the cash amounts being reported as operating, investing, and financing activities, the cash flow statement must disclose other information, including the amount of interest paid, the amount of income taxes paid, and any significant investing and financing activities which did not require the use of cash.
The statement of cash flows is to be distributed along with a company's income statement and balance sheet.
Well, Cash flow is used to access the quality of company's income, that is, how liquid it is, which can indicate whether the company is positioned to remain solvent.
The gross receipts and gross payments will be reported in the cash flow statement. or statement of cash flows is to provide information about a company's gross receipts, investing and financial activities which didn't require the use of cash.
cash flow statement is use to summarizes the cash transactions of the business.
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