Answered: What questions do investors and…

What questions do investors and creditors ask about the company's future cash flow based on the facts in the income statement

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 14EA: Use the following excerpts from Kirsten Companys Statement of Cash Flows and other financial records...

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Question

What questions do investors and creditors ask about the company's future cash flow based on the facts in the income statement?

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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