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Unformatted text preview: Companies use their estimated cash flows to determine what to do with excess cash and whether or not they will need to borrow during a year. This enables the managers to plan for these needs before they have excess cash sitting in a bank account or have run out of cash and need to pay their employees. In addition to short-term cash needs, cash flow analysis is used for many business decisions, including for example, whether a company should invest in long-term assets, whether a part should be made or bought, and whether a new market should be opened. External users, such as suppliers, creditors, and potential investors, use the statement of cash flows when analyzing companies to decide whether to sell to, loan to, or invest in a company....
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This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.
- Spring '09