Week 9 class 2

Week 9 class 2 - Week 9 class 2 2. Four purposes of the...

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Week 9 class 2 2. Four purposes of the cash flow statement are to (a) predict future cash flows, (b) evaluate management decisions, (c) determine the ability to pay dividends to shareholders and interest to creditors, and (d) show the relationship between net income and cash flows. 7. Cash may decrease during a year when income is high because the entity may be using cash to invest in long-term assets. Cash may increase in a bad year because the entity may be borrowing heavily. The cash flow statement reports these activities to show where cash came from and how it was spent. (10-15 min.) E 12-1 DATE: _______________ TO: Managers of Triumph Corporation FROM: Student Name SUBJECT: Purposes of the cash flow statement The cash flow statement is designed to help predict the future cash flows of a business. The cash flow statement measures historical cash flows, which are a good predictor of future cash flows. Net income is an important measure of management performance, but it takes cash to pay the bills. A manager’s performance should be evaluated in part on the
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Week 9 class 2 - Week 9 class 2 2. Four purposes of the...

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