Cashflow statement concept


International Financial Reporting Standards [IFRS] require companies to publish a cash flow statement as part of annual financial statements. The purpose of this statement is to reveal to users how cash was generated and then how it was used by the company during the period under review. The cash flow statement should be useful to users in a number of ways. It should, for example, help in assessing:

·        the ability of the business to generate future cash flows
·        the effect of major events such as a share issue or acquiring another business on the liquidity of the business
·        the ability of the business to meet future commitments such as loan repayments, interest payments, taxation due, etc
·        likely future financing needs.

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