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Provide a statement of cash flows, when used in conjunction with the rest of the financial statements information that enables users to evaluate the changes in net assets of an entity in its financial structure including the degree of liquidity and its ability to repay its debt and its ability to affect the amounts and timing of cash flows in order to comply with conditions and opportunities changing cash flow information that is useful is in assessing the ability of established on generating cash and cash equivalents and enables users to business models in order to assess and compare the present value of future cash flows for various facilities as it improves the ability to compare when preparing reports on the performance of operating facilities because this list exclude the effects of using different accounting treatments for the same transactions and events, use historical information to cash flow as an indicator of the value and the extent to make sure check future cash flows. it is also useful to examine the extent of the previous estimate accuracy preparation of future cash flows and to test the relationship between profitability and net cash flow and the impact of price changes.
Operational activity index = net cash flow from operating activities ÷ net income from operating activities before interest and tax.
- This ratio shows the ability of the operating activities to generate operating cash flow and reflect the results of operational activities according to the accrual basis of accounting and the results of operational activities in accordance with the cash basis.
The rate of return on equity of operating cash flow = Net cash flows from operating activities ÷ property rights.
This ratio shows the return on equity from cash flows from operating activities.
The rate of return on assets of operating cash flow = Net cash flows from operating activities ÷ total assets.
This ratio shows the company's ability to generate operating cash flows through the use of its assets.
The proportion of cash flows from operating activities per ordinary share = Net cash flows from operating activities - dividend preference shares ÷ Weighted average ordinary shares.
This ratio shows the share of common stock of the net cash flows from operating activities and the entity's ability to distribute cash dividends
Cash flow statement is a statement which is disclosed the liquidity cash position of company which help to know the major source of cash for particular period, as the books of accounts is maintained in accrual basis.
It is very important to know the entity to know the real source of cash to plan and porject for next financial year
The cash flow statement reports a company's major sources and uses of cash during the same period of time as the company's income statement
The cash flow statement is organized into four major parts:
Such as: 1) cash from operating activities,
2) cash from investing activities,
3) cash from financing activities,
4) and supplemental information such as interest paid, income taxes paid, and
significant non cash exchanges.
The IAS 7 has described the disclosure of Cash flow statement
The main role of cash flow statement to nature/ source of cash as stated above major parts is arrived to entity.
The management make the correct plan to utilized the cash for next financial year
The role of a cash flow statement is to prides the information about a company's sources of cash and uses of cash, over a specified time period. Moreover, it specifies the generation and utilization of cash by three major business activities which are operating, investing and financing.
One of the major role of the statement of cash flow are cash control. Moreover it gives an opportunity to assess cash inflow/outflow from the operating investing and financing activities.
Limitations of Cash-flow statement are the ignoring or the real timing of that inflows and outflows. Also that it does`nt consider the profitability, and we need other statements to be used with it to get suitable financial view.
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. Cash flow represent four basic element of accounting 1. Operation Activities.
2. Investment Activities
3. Financing Activities
4. Supplemental Information
Cash flow statement gives the exact image of cash inside the company. Helps to know outflow and inflow of cash.
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Cash flow statements reports the sources of cash generation and uses of cash for the Company
i agree with all responses so far , great question , and great answers , thanks
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