wk5 dq2 - involve cash, but they reduce the companys net...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Discuss how the statement of cash flows is used by investors. If you were an investor reviewing a statement of cash flows, what section would interest you most? Why? Now discuss the circumstances in which other sections of the statement might be important to an investor. Cash flow is one of the most vital dimensions used by investors in valuing a  company. You can see understanding how much a company is really growing (or  not). Cash flow measures the sum of cash that the company brings in and uses  throughout the course of an accounting period (year or quarter) after all fixed  expenses are eliminated.  It is imperative to remember that depreciation and  amortization are non-cash items, they are expenses on paper only and do not 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: involve cash, but they reduce the companys net income on the books. Me I would be most interested in the cash flow because it is one way measure and evaluating a company, it is important because it focuses on actual operations and eliminates one-time expenses and non-cash charges. But and investor should also review the balance sheet, a nalyzing how the balance sheet changes over time will reveal important information about the company's business trends. You can also monitor the companys ability to collect revenues, how well they manage their inventory, and even assess their ability to satisfy creditors and stockholders....
View Full Document

Ask a homework question - tutors are online