Financial Strength Of Cash Flows Essay

Financial Strength Of Cash Flows Essay

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In a business, it is important to know how funds are generated and spent. The statement of cash flows can provide this type of information. The statement of cash flows is important as it can give an overview that other income statements or balance sheets cannot. The following will give an overview of what a statement of cash flows is, what information it provides and why they are important in assessing the financial strength of an organization.
What is the Statement of Cash Flows?
Organizations needed a way to present how cash was flowing in and out of their operations. It was always difficult to show for assets that are close to becoming cash and current liabilities that are close to being paid in cash. The statement of cash flows can illustrate exactly how the working capital is moving in and out of the business over a short period such as over a month or a year. Organizations started using a cash flows statement which shows current assets minus current liabilities. Cash flow statements have been around for some time, as the Northern Central railroad issued a summary of its ...

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