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September 22, 2008

Why is the Cash Flow Statement identified as one of the financial statements?

The Cash Flow Statement or Statement of Cash Flows is required as part of a full set of financial statements because of the Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 95, Statement of Cash Flows.

You can read Statement No. 95 at no cost at www.FASB.org/st.

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7 Responses to “Why is the Cash Flow Statement identified as one of the financial statements?”

  1. babuloahmed on September 24th, 2008 1:05 am

    cash folw is very impottant but why fund flow is not important

  2. Ken on October 4th, 2008 9:42 am

    The cashflow statement is considered as part of the financial statement due to it importance as it shows the status of the company cash position within the financial, as it actually depict whether the company need more invetsment to expand or would need to considered whether to borrow funds and how to properly strategies so that the company would not run into liquidity in the mere fuure. Therefore, as Financial statement are prepared to show the position of the company then shareholders would also need to see the position of the cash which help them to decide whether dividend would be paid or deferred.

  3. MEKONNEN TADESSE on October 8th, 2008 5:59 am

    Cash flow is recently one of the most important financial statement. It show us the actual cash position of an organisation.
    It helps to managerial investment decision. As you know profit is not as such very strong to show the financial position.

    MEKONNEN TADESSE
    FROM ETHIOPIA
    Email mekotad@yahoo.com

  4. Dawood on October 11th, 2008 8:44 am

    The statement of cash flows is one of the main financial statements. (The other financial statements are the balance sheet, income statement, and statement of stockholders’ equity.)

    The cash flow statement reports the cash generated and used during the time interval specified in its heading. The period of time that the statement covers is chosen by the company. For example, the heading may state “For the Three Months Ended December 31, 2007″ or “The Fiscal Year Ended September 30, 2007″.

    The cash flow statement organizes and reports the cash generated and used in the following categories:

    1. Operating activities – converts the items reported on the income statement from the accrual basis of accounting to cash.
    2. Investing activities – reports the purchase and sale of long-term investments and property, plant and equipment.
    3. Financing activities – reports the issuance and repurchase of the company’s own bonds and stock and the payment of dividends.
    4. Supplemental information – reports the exchange of significant items that did not involve cash and reports the amount of income taxes paid and interest paid.

  5. M Dolley on October 14th, 2008 11:40 am

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  6. g.momolu m. pewu on November 3rd, 2008 11:34 am

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  7. Mary on May 20th, 2009 10:14 am

    What is role of the Cash Flow Statement?
    What changes to the Cash management policies would recomend for a business that has a low liquidity ratio?

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