The cash flow statement is a critical financial statement, often more important to the survival of a business than profit as reported on the income statement.

Question

Quizplus · Accepted Answer

The cash flow statement provides insight into a company's liquidity and its ability to generate cash to fund operations, pay debts, and invest in growth, which is crucial for the survival and sustainability of a business, especially in the short term. Profit, while important, does not necessarily equate to cash available, as it includes non-cash expenses and may be impacted by accounting practices.

The Cash Flow Statement Is a Critical Financial Statement, Often