What is a cash flow statement and why is it important?
A cash flow statement is a financial document that shows how cash moves in and out of a business. It's important because it helps assess the company's liquidity, solvency, and overall financial health.
What are the main components of a cash flow statement?
The main components are operating activities, investing activities, and financing activities. Each section provides insights into different aspects of cash flow.
How can I analyze a cash flow statement?
You can analyze it by looking at the net cash flow, comparing cash inflows and outflows, and assessing trends over time to understand the company's cash management.
What are some common mistakes to avoid when preparing a cash flow statement?
Common mistakes include failing to account for all cash transactions, mixing cash flow with profit, and not updating the statement regularly.
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