Why are investors attracted to the income statement and cash flow statement when it comes to financial reporting? Contrast the information included in the income statement with the cash flow statement

Why are investors attracted to the income statement and cash flow statement when it comes to financial reporting? Contrast the information included in the income statement with the cash flow statement

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 15Q: Why is using the direct method to prepare the operating section of the statement of cash flows more...

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Question

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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