Why has the statement of cash flows become so important for managers and investors?
The statement of cash flows has become important for manager, investors, and accountants because it contains information that is mainly valuable for determining the financial well-being of the firm. By disclosing all operating activities, investing activities, and other financial activities in one statement, users of the data can quickly assess the current condition of the firm and how long-term investments and liabilities may affect the firm in the future. Managers in particular can use the statement of cash flows to quickly determine how much revenue is earned from operations in comparison to other means of revenue and after operating expenses. Similarly, investors can see how much money a firm earns in comparison to how much it owes; allowing the investor(s) to make a more educated decision about the security of their investment. Another benefit to managers, investors, accountants, and other users, is that the statement of cash flows derives its information from comparative balance
