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Apart from Cash Inflow and Outflow dose any other purpose it fulfills. Or it is Statutory requirement.
Lies the importance of cash flow in the statement of sources and uses of funds the project
in Balance sheet that is just an amount of cash while Cash flow gives you the value how and why it comes to balance sheet
To know wht are the inflow and outflow of company.
Out Flow : Obligations
Inflow: Income
Easy and Fast to understand..
The primary purpose of a statement of cash flow is to provide the cash receipts and payments of an entity during a period.
Secondary purpose is to provide information about investing and financing activities.
So that, If cash flow is used with other financial statements, it should help investors,creditors, Banks etc.
Apart from inflow and outflow It also provide the information regarding the utilization of resources of company effectively and efficiently.
The purpose of cash flow statements is to monitor a business in terms of income and expenditures which is the primary requirement for a healthy business.Other than that cash flows are maintained to determine the expected output with the current output during a project in the business so that steps can be taken during the project to increase the project outcome.
To know the details of cash inflow & outflow according to each category divided into.........1.Cash from Operating activities2. Cash from Investing activities3. Cash from Financing activities.
The objective of IAS7 is to require the presentation of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities.
cash flow statement helps to know that how much cash went out from business and how much cash come into business in a financial year...it visible to balance sheet as cash in hand balance under the head current assets..it helps to know the cash inflows and outflows on the basis of activity whether operating,financing,investing but balance sheet doesn't help
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 year2013 will report the causes of the change in a company's cash and cash equivalents between its balance sheets of December31,2012 and December31,2013.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.
It is basically used to assess cash generation of a company. A company may be earning in millions as per profit and loss account but it may not have generated cash in actual. Rather profit is in term of increase in receivables or inventory etc.
It is used by investors specifically while making investment in any company. That's why its an integral part of Financial Statements
