A Statement Of Cash Flow

1746 Words Oct 12th, 2015 7 Pages
STATEMENT OF
CASH FLOWS
Research conducted by Matthew Firth

CONTENTS

What is a statement of cash flow Page 3
What is the purpose of a statement of cash flow Page 3
How does a statement of cash flow effect business managers and shareholders? Page 4
The structure of a statement of cash flow explained Page 4
How to prepare a statement of cash flow Page 5
Example of a statement of cash flow Page 6
References Page 7

What is a statement of cash flow?

A statement of cash flow or cash flow statement is a detailed report that provides investors and shareholders with the correct information about cash inflows and outflows and the resulting change in cash and cash equivalents over a period of time. They are issued by the management sector of the business focusing particularly on the types of activities that create and use cash.
A statement of cash flow “can be used to discern trends in business performance that are not readily apparent in the rest of the financial statements” (Accounting tools, Statement of cash flows overview). It is especially useful when there is a difference between the amount of profits reported and the amount of net cash flow generated by operations. “We all know the cliché that ‘cash is king’. For many investors, cash and cash flow are not only a critical area of focus when analyzing value and value creation, they also help in analyzing liquidity” (IFRS document, The Essentials: Cash Flow Statements).

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