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brighton banda
Financial Consultant, Zambia
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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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Welcome to the Cash Flow Management forum. The topic being discussed here is: "Importance of Cash Flow Statements versus Traditional Financial Statements (Profit)".
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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, United States
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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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