Scenario: You work for a large company in which the CEO is not entirely involved

Question

Scenario:

You work for a large company in which the CEO is not entirely involved in the day-to-day workings of the financial department. As the CEO is walking through your department, he sees you working on a Statement of Cash Flows. Intrigued, he asks "what's that you're working on?

Now, you are well aware of the importance and use of the SOCF within the business world. You are presented with the unique opportunity in explaining this to your boss. What key points would you address with the CEO? What makes those points so important? Explain.

Scenario:

You work for a large company in which the CEO is not entirely involved in the day-to-day workings of the financial department. As the CEO is walking through your department, he sees you working on a Statement of Cash Flows. Intrigued, he asks "what's that you're working on?

Explanation / Answer

Importance of Statement of Cash flows:

Every business need to know its cash position at a particular time. Statement of cash flow shows the net Cash Available. Statement of cash flows also categories the cash flows in three forms:

Cash flows from operating activities

Cash Flows from Investing activities and

Cash Flows from financing activities

This bifurcated cash flows statement help the co. to analyze the cash used or provided by different activities.

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