Question

State any two objectives of a cash flow statement.

Hint:

A cash flow statement is a vital tool for understanding a company's ability to manage cash and meet its short-term obligations.

Answer 1

Two objectives of a cash flow statement are:
1. Assessing liquidity and cash position: It provides information about the inflows and outflows of cash and cash equivalents, helping to evaluate the company's liquidity.
2. Evaluating cash-based performance: It helps stakeholders understand how the company generates and uses cash through operating, investing, and financing activities.