Importance of Cash Flow Statements versus Traditional Financial Statements (Profit)

      
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		            		brighton banda
Financial Consultant, Zambia
			            
Importance of Cash Flow Statements versus Traditional Financial Statements (Profit)

	          		What is the importance of cash flows in comparison to financial statements (profit)?
				      
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						            	Ledja Dhima
Manager, Albania
												
				                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.
				                
										              2

						            	juwele sibanda
Accountant, Zimbabwe
												
				                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, United States
												
				                Cash Flow versus Financial Statements

													- Income statements describe sales, income, tax and net income.. Separates out operating income (EBI... Sign up
				              
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						            	Javnyuy Joybert
Accountant, Cameroon
												
				                Importance of Cash Flow Statement

													The cash flow statement is one of the three most important financial statements a business owner use... Sign up
				              
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						            	Juan Jarquin
Financial Consultant, Nicaragua
												
				                Importance of Cash Flow Statement

													The Cashflow Statement is vital to determine a company's capacity to generate cash to meet its short... Sign up
				              
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