One of the reasons why cash flow analysis is popular is because:
A) cash flows are more subjective than net income.
B) cash flows are hard to understand.
C) it is easy to manipulate, or spin the cash flows.
D) it is difficult to manipulate, or spin the cash flows.
E) None of these.

Question

Quizplus · Accepted Answer

Cash flow analysis is popular because it is difficult to manipulate or spin the cash flows. Unlike net income, which can be affected by various accounting methods and estimates, cash flow is a more objective measure of a company's financial performance. Thus, cash flow analysis is a more reliable tool for evaluating a company's ability to generate cash and pay its debts.

One of the Reasons Why Cash Flow Analysis Is Popular