Cash Flow Of A Company

886 Words4 Pages
There is an old saying by Earl Wilson (2015) that states “Today, there are three kinds of people: the haves, the have-nots, and the have-not-paid-for-what-they-haves” (p. 1). This saying also applies to businesses, and investors will try to identify which category a company falls in as they conduct their research. Investors want to know they are committing their money to an organization that can effectively manage its cash. Cash is the fuel within every organization. It is extremely important for every executive, manager, and investor to understand the cash flow battle rhythm within their organization by utilizing the statement of cash flow. Analyzing the statement of cash flow, will enable investors to determine if a company is effective at managing their finances.
Purpose of the Cash Flow Statement
Cash inflow and outflow is a litmus test of a company’s performance during a specific time frame. Cash is the lifeline of the company and the availability or lack of cash is a clear indication of a successful or failing business for most financial analysts, investors and company management. The statement of cash flow is the means used by many to view the cash movement within an organization. According to Epstein (2014), “The purpose of the statement of cash flows is to determine how cash flowed into and out of the company during a certain period of time” (p.156). This management tool can assist executives, financial managers and stock holders identify the organization’s
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