The statement of cash flows is helpful for spotting weaknesses as well as gauging success.

Question

Quizplus · Accepted Answer

The statement of cash flows provides insights into a company's cash inflows and outflows, which can help identify areas of weaknesses or inefficiencies. For example, if a company consistently generates negative cash flow from operating activities, it may suggest issues with their core business operations. On the other hand, positive cash flow from operating activities can indicate success in generating cash from day-to-day business operations. Therefore, the statement of cash flows can be useful for both spotting weaknesses and gauging success.

The Statement of Cash Flows Is Helpful for Spotting Weaknesses