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State the Uses of Cash Flow Statement? - Accountancy

Short Note

Short Answer Question

State the uses of cash flow statement?

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Solution

The uses of cash flow statement are as follows:

1. It is useful for short term financial planning about inflows and outflow of cash.

2. It helps in analysing the reason for the change in cash and cash equivalent balances of a company

3. It assists in determining and assessing liquidity and solvency positions of a company.

4. It enables to analyse and study the trends of receipts and payments of cash from various activities of a company and thereby helps in drafting various policy measures and short term planning.

5. It enables the segregation of cash flows from operating, investing and financing activities of the business separately.

6. It assists in making decision about distribution of profit with reference to the availability of cash.

Concept: Benefits of Cash Flow Statement
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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 6 Cash Flow Statement
Short Answer Question | Q 3 | Page 272
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