While creditors rely heavily on cash flow information, investors do not need to be concerned with cash flows and can rely exclusively on earnings.

Question

Quizplus · Accepted Answer

This statement is false. Investors do need to be concerned with cash flows as it provides important information about a company's ability to generate cash and pay dividends or fund future growth. Earnings can be manipulated through accounting practices and may not reflect a company's true financial health.

While Creditors Rely Heavily on Cash Flow Information, Investors Do