By looking at cash flow statements what conclusions are drawn. how it is helpful.
From India , Bangalore
In addition to the other suggestions, it's important to understand where your cash is going. Prepare a cash flow projection which is a tool that will help you track your cash flow and also allow you to project your cash flow in the coming months. I update my cash flow projection every month and don't make a large purchase before checking to see how it will affect my cash flow.
From Pakistan , Lahore
The Cash Flow Statement portrays how a company has spent its cash. It is often used in tandem with the other two key reports – the Profit and Loss and the Balance Sheet. It is the third component of a company’s financial statements.
Why Cash Flow Statement is Important?
The cash flow report is important because it informs the reader of the business cash position. For a business to be successful, it must have sufficient cash at all times. It needs cash to pay its expenses, to pay bank loans, to pay taxes and to purchase new assets. A cash flow report determines whether a business has enough cash to do exactly this.
Having cash is a key requirement for a business to stay solvent. When a business has no longer enough cash to pay its dues, it is often declared bankrupt.
For this introduction to accounting, we will not go through the actual preparation of an actual cash flow report. In fact in the business world, small businesses rarely produce a cash flow report, as profit and loss report is sufficient for their needs. It is unlikely that a small business such as a bakery will involve complex non cash transactions that would warrant such information. Therefore, it is considered a waste of time and money to have an accountant prepare a report that would be of little use to anyone!
On the other hand, for large entities such as Nike and Microsoft, having a cash flow report is imperative. Such companies will often have a significant amount of non-cash transactions, sometimes even billions of dollars in revenue that is simply owed to them but hasn’t been received in cash yet. In these situations, a profit and loss statement is not always sufficient, and a cash flow report is valuable to many users, such as banks and shareholders.

From India,

If you are knowledgeable about any fact, resource or experience related to this topic - please add your views.

Add Reply → Start New →

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2022 Cite.Co™

All Material Copyright And Trademarks Posted Held By Respective Owners.
Panel Selection For Threads Are Automated - Members Notified Via CiteMailer Server