Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the inflows and outflows of cash for a specific time period, including the cash used to pay off existing debts. By analyzing the cash flows from operating activities, it is possible to determine whether the company has sufficient cash to meet its debt obligations as they come due.

Decisions on Whether a Company Can Pay Its Existing Debts