"Use of Cash Flows Statements" Please respond to the following:
Assess what information may be revealed about the sustainability of a company by review and analysis of a company’s statement of cash flows that may not be revealed in the balance sheet or income statement. Provide support for your rationale.
Create an argument indicating that the statement of cash flows contains the most valuable information related to a company’s performance for users of financial statement information. Provide support for your argument
The data that is presented in the statement of cash flows is used to review the company’s cash flow items for analysis of the current state of the organization and future growth. It is also used to be able to analyze trends with regards to the various cash flow components over different periods of time and their actual relationships with their related income statement items. It also allows you to consider the relationships of all cash flow components over distinct periods of time. The statement of cash flows helps investors, creditors and others assess the company’s ability to generate future cash flows with regards to growth potential; their ability to be able to pay dividedness and meet all of their financial obligations; identify the reasons that there are differences between net income for the company and its net cash flow from operating activities; and finally it helps identify the cash and non-cash investing and financing transactions that occurred during this particular reporting period (Weygandt, Kimmel &Kieso, 2012).
The statement of cash flows contains the most valuable information related to a company’s performance for investors, creditors and others because it…