RSM219H1 Chapter Notes - Chapter 5: Cash Flow Statement, Cash Cash, Cash Flow
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RSM219H1 Full Course Notes
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Many consider the statement of cash flows to be the most important part of a financial statement. It features parts that affect the overall health of the company but cannot be seen in the statement of income. It can also help a user predict what can happen in the future of the company. It also explains changes in key account balances. If a creditor (cid:449)a(cid:374)ts to (cid:271)e a(cid:271)le to assess a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s a(cid:271)ilit(cid:455) to ge(cid:374)erate suffi(cid:272)ie(cid:374)t (cid:272)ash to ser(cid:448)i(cid:272)e its de(cid:271)ts, as some liabilities are on accounts. It also helps determine the future cash position. All of the inflows and outflows related to the sale of goods and services. I(cid:374)di(cid:272)ates that a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:272)ore (cid:271)usi(cid:374)ess is ge(cid:374)erati(cid:374)g (cid:373)ore (cid:272)ash tha(cid:374) its usi(cid:374)g. This inflow can be used for other activities. Companies regular operating activities recquired more cash than they generated. A (cid:272)o(cid:373)pa(cid:374)(cid:455)"s decisions regarding the purchase or sale of property, plant, and equipment.