If the income statement of a financial plan shows that the business will be profitable, why is there a need for a statement of cash flows?

There is a need for a statement of cash flows,even if income statement shows profit,due to the…

Answered: why is there a need for a statement of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Which of the following is not true about the information provided in the income statement? OIt helps in evaluating the past performance of the enterprise. O It provides a basis for predicting future performance. It helps assess the risk or uncertainty of generating future cash flows. O It helps in evaluating working capital.
What is cash flow statement? What are the importance of cash flow in a business?
What are some of the benefits and limitations of using the cash flow statement for financial analysis? How can investors and analysts use the information presented on the cash flow statement to make decisions about a company?
What sorts of questions about future cash flows do investors and creditors ask using the income statement?
How can changes in working capital items, such as accounts receivable and inventory, affect the cash flow statement, and how can these changes be interpreted by investors and creditors?
Which of the following would not be on the statement of cash flow? A. Cash flows from operating activities B. Cash flows from financing activities C. Cash flows from Contingent activities D. Cash flows from investing
O Balance sheet In analyzing a company's financial statements, which financial statement would a potential investor primarily use to assess the company's liquidity and financial fiexibility? O Income statement O Staterment of retained earnings Statement of cash flows
Differentiate between a balance sheet and an income statement of a listed company. How are the two statements related? Why is it often necessary to standard the items in the financial statements? Describe how this could be implemented. How does the statement of cash flows differ from the income statement? What are the various components of the cash flow statement? Describe the contribution of each of the components in terms of their importance to the generation of cash of a company? Explain what is meant by the following statement: ‘A ringgit today is worth than a ringgit to be received in future.” Describe the possible factors contributing to this situation. Describe the essential differences between the following cash flow streams: Annuity versus perpetuity Annuity due versus ordinary annuity Illustrate with an example each. What is a bond sinking fund? What is the purpose of establishing a sinking fund? Are bonds that provide for a sinking fund regarded as being risker than…
Financial managers should ultimately prioritize which of the following: A) Revenues B) Operating Cash Flows C) Profits
As applied to business, discuss the importance of analyzing cash flows.
Question: Explain the concept of a cash flow statement in financial reporting and its importance in assessing a company's financial health. Provide an example to illustrate the preparation of a cash flow statement.
Conduct a comprehensive review of the available literature to determine the income statement's and cash flow statement's relative information content. Why are income statements and cash flow statements both valuable to investors?

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