The statement of cash flows can aid in determining whether a company is able to collect payments from customers and pay its bills.

Question

Quizplus · Accepted Answer

The statement of cash flows gives a clear picture of a company's cash inflows and outflows over a period of time. This information can be used to determine the company's ability to collect payments from customers and pay its bills. For example, if a company has a positive net cash flow from operating activities, it indicates that it is able to generate sufficient cash from its operations to meet its financial obligations. On the other hand, if a company has a negative net cash flow from operating activities, it may indicate that it is facing difficulties in collecting payments from customers or managing its expenses. Therefore, the statement of cash flows can be a useful tool for analyzing a company's financial performance and identifying areas for improvement.

The Statement of Cash Flows Can Aid in Determining Whether