How can a cash flow statement help in decision-making?

[Accounting Byte]

Cash flow statement helps in decision making since it displays a firm’s liquidity and amount of cash on hand. Managers utilize it to predict possible cash deficits and therefore prepare itself for necessary future cash needs for working capital, investment or repayment of debts. For example, in the cash flow statement it appeared that the cash outflows are greater than the cash inflows on a consistent basis, management may lay off capital expenses that are not crucial or seek financing. It also assists the investors argue the financial position of a business and its ability to fund expansion or dividend payment.

Visit us: https://accountingbyte.com/cash-flow-statement/

[Author]

Posts