time. Cash flow statement is prepared to ensure that the business unit will have necessary cash
with it and it will not face liquidity problems. It shows the movements of cash into and out of the
firm and its net effect on the cash balance with the firm. A cash flow statement is very useful to:
1) Determine the amount of cash needed to start the enterprise.
2) Plan for timing of loan funds.
3) Ensure that if projected cash flows are met, cash will be available to meet payments as
they become due.
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