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brighton banda, Financial Consultant, Zambia
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What is the importance of cash flows in comparison to financial statements (profit)? (...) Read more? Sign up for free
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Ledja Dhima, Manager, Albania
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Cash Flow versus Financial Statement
A financial statement is important because it shows company's profit. Sales minus expenses, equal to gross profit or profit before tax.
However it does not show whether is company is liquid or not (Liquidity). A profitable company is not necessary liquid. Cash flow shows a company's liquidity and tells you (the bank) how the company will generate cash (which sources mostly). The current crisis proved liquidity is the key factor of a company's business continuance.
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juwele sibanda, Accountant, Zimbabwe
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Cash Flows versus Profit in Financial Statements
I agree with Ledja, rely on cash flow statement for your daily decisions:
- A profitable company can have serious challenges meeting short term liabilities.
- And a loss making company can still have a strong liquidity.
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sweety
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Cash Flow versus Financial Statements
- Income statements describe sales, income, tax an (...)
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Javnyuy Joybert, Accountant, Cameroon
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Importance of Cash Flow Statement
The cash flow statement is one of the three most i (...)
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Juan Jarquin, Financial Consultant, Nicaragua
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Importance of Cash Flow Statement
The Cashflow Statement is vital to determine a com (...)
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More on Cash Flow Management
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Special Interest Group Leader
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