Why is the operating activities section often believed to be the most important part of a statement of cash flows?

Question

Quizplus · Accepted Answer

The operating activities section of the statement of cash flows provides information about a company's ability to generate cash from its core business operations. This is important as it shows whether the company is able to meet its current cash needs without relying on external sources of funding. It also helps in assessing the company's profitability, liquidity, and efficiency in managing its working capital.

Why Is the Operating Activities Section Often Believed to Be