Information on a company's cash flows is used for all of the following,except A)assess the company's ability to repay debt in the future. B)evaluate the potential for the company to be able to pay dividends in the future. C)evaluate a company's liquidity (i.e. ,the value of a company's liquid assets in comparison to its short-term debt obligations). D)estimate the company's future cash requirements.

Question

Quizplus · Accepted Answer

C) Evaluate a company's liquidity is incorrect because liquidity refers to the ability to quickly convert assets into cash without significant loss in value, which is more directly assessed through a company's balance sheet rather than its cash flow statement. The cash flow statement provides information on the inflows and outflows of cash, which helps in assessing a company's ability to generate cash to meet its obligations, invest in its operations, and return money to shareholders, but it does not directly measure liquidity in terms of current assets versus current liabilities.

Information on a Company's Cash Flows Is Used for All