Cash Flow Statement

Question 1

Whats does the cash flow statement tell us?

Answer 1

How the business has generated cash during the period and where that cash has gone

Question 2

Why is cash so important?

Answer 2

Without a steady inflow of cash, an entity will not survive

Used to pay day-to-day business expense
and repay liabilities

Inflow must exceed outflow over time

Question 3

Cash Flow allows the assessment of

Answer 3

A company’s current and likely future capability to generate cash flows.

Question 4

The Indirect Approach

Answer 4

Relies on the fact that sooner or later, sales revenue gives rise to cash inflows and expenses gives rise to outflows.