Cash flow ratios add to a financial statement analysis by ensuring that profits are being translated into cash flows.

Question

Quizplus · Accepted Answer

Cash flow ratios provide insight into how efficiently a company generates cash from its operations and how it uses it to pay off debts, invest in projects, and pay dividends. This information complements the profit and loss statements by showing if a company's positive profits are resulting in positive cash flows, which is an important factor in determining the overall financial health of a company.

Cash Flow Ratios Add to a Financial Statement Analysis by Ensuring