Sample Business Paper on The Statement of Cash Flows

The statement of cash flow

The Statement of cash flow is a financial statement which deals with the amount of cash and cash equivalents entering and leaving a company at a given period. It shows how effective a firm manages its cash position. Cash, as used in the statement of cash flow, is current assets involving currency or currency equivalents that can be acquired immediately as in case of money market accounts (Subramanyam, 2009). Operating activities are the company’s core business activities, such as manufacturing, distributing, marketing and selling of product or services in which a company involved directly to the market I day to day activity. Investing activities are the other main category of net cash activities in the statement of cash flow, and it deals with buying and selling of long term assets and other investments. Long term assets usually consist of fixed assets such as vehicles, buildings, and machinery while investments are a little more different from long term assets since it depends on the source of investments (Subramanyam, 2009). Financial activities are activities undertaken by business to fulfill an economic goal which may include buying and selling of products or assets, issuing of stocks or bonds or any other events with financial objectives.

Users of the cash flow statement are interested in whether the company has inflows from its operations. A company must be able to settle its daily cost from cash it brings in from business rather than borrowed funds. The investor wants to make sure the company has enough inflows to pay an adequate return to investment (Maynard, 2017). An investor also intends to evaluate how an organization manages its cash since investor might consider selling their shares. The creditors have much interest in making sure the company maintains its money well because apart from the benefit they get from debtors they need to make sure the debtor can pay the principal.

Reference

Subramanyam, K. R. (2009). Financial statement analysis. Includes index.

Maynard, J. (2017). Financial accounting, reporting, and analysis. Oxford University Press.

The post Sample Business Paper on The Statement of Cash Flows appeared first on Essay Writing Service.