Importance of Cash Flow Statement
Javnyuy Joybert, Accountant, Cameroon, Member
The cash flow statement is one of the three most important financial statements a business owner uses.
The concept of cash flow is different from the concept of profit or net income and the business owner should think of BOTH
in different terms and analyze each from different perspectives.
There are financial ratios that help the business owner focusing on net profit and those that focus on cash flow.
The cash flow statement shows how much cash comes in and goes out of the company over the quarter or the year.
At first glance, that sounds a lot like the income statement in that it records financial performance over a specified period.
But there is a big difference between the two. So to be able to finance and invest properly and get the required returns, the business owner and investor must take the cash flow statement very seriously.