QAEconomics › The statement of cash flows helps analysts evaluate all but which of the following?
Q

The statement of cash flows helps analysts evaluate all but which of the following?

A. Source of cash used to finance investing activities.

B. Source of cash used for debt repayments.

C. Differences between net income and net operating cash flow.

D. Ability of the company to generate profit.

E. Source of cash used for plant expansion.

A

Answer: D. Ability of the company to generate profit.

Cash flow statements do not help analysts evaluate the company’s ability to generate profit. The statement of cash flows is assembled right after the balance sheet and the income statement. This is very important as it helps to have an overall understanding of the company. The cash flow statement helps in making adjustments to any information garnered or recorded on the income statement. With this, you see your net cash flow which includes the precise amount of cash at hand for a particular period as well as the source of cash used for a variety of purposes.

1 year ago
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