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

Cash Flow Management
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brighton banda
Financial Consultant, Zambia
What is the importance of cash flows in comparison to financial statements (profit)? (...) Read more? Sign up for free

  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.

  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.


Cash Flow versus Financial Statements

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  Javnyuy Joybert
Accountant, Cameroon

Importance of Cash Flow Statement

The cash flow statement is one of the three most i (...)

  Juan Jarquin
Financial Consultant, Nicaragua

Importance of Cash Flow Statement

The Cashflow Statement is vital to determine a com (...)


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