What is the Cash Flow Statement.What does a Cash Flow Statement entail?Why is it important?What are the main items in the cash flow from operating activities? What is the total? Has it increased or...

Cash Flow Statement:
A cash flow statement is a financial statement that summarizes the cash inflow and outflow from the business based on different activities conducted by the business. It is mandatory to prepare cash flow statement at the time of financial reporting. It actually summarizes the full income statement and balance sheet and takes into account all the cash transactions from operating activities, financing activities and investing activities (Arsenijević and Đukić 2017).
The importance of the cash flow statement lies in the fact that it depicts the cash position of the company. Just checking the profit is not enough, but the company should always have enough cash to meet the short term obligations like fincial charges and short term expenses for the operation of the business like administrative expenses, sales expenses, etc. Cash flow is important for the users of the fincial statement as well (Kent and Bu 2018). Lenders can check if the company will be able to pay off their debt along with the finance charges. Vendors need to check if the company can pay off their dues at required time. Investors need to check if the company can pay any dividend based on the cash generated. Cash flow statement also helps to monitor the debts of the company and helps to identify unnecessary investments being made by the company. This statement helps the management to make decisions regarding various business activities and also help to identify the exact activity which can generate more cash in future.
But there are also some limitations of the cash flow statement (Miao, Teoh and Zhu 2016). Proper liquidity and the solvency position of the company cannot be assessed from the cash flow statement. The statement fails to depict the actual income of the company since it does not consider any non cash items and so it depicts only the cash...