ACTG 210 Lecture Notes - Lecture 13: Free Cash Flow, Income Statement, Accrual
Document Summary
Usefulness and format: the statement of cash flows reports the cash receipts and cash payments from the operating, investing, and financing activities during a period, in a format that reconciles the beginning and ending cash balances. The information in a statement of cash flows helps investors, creditors, and others assess: The company"s ability to generate future cash flows. By examining relationships between items in the statement of cash flows, investors make predictions of the amounts, timing, and uncertainty of future cash flows. The company"s ability to pay dividends and meet obligations. Employees, creditors, and stockholders should be particularly interested in this statement because it alone shows the flows of cash in a business. The reasons for the difference between net income and net cash provided (used) by operating activities. Many readers of the statement of cash flows want to know the reasons for the difference between net income and net cash provided by operating activities.