Cash flow from investing activities is considered the most important category on the cash flow statement because it is considered the best measure of expected earnings.

Question

Quizplus · Accepted Answer

Cash flow from investing activities reflects the cash inflows and outflows related to a company's investments in assets such as property, plant, and equipment, and acquisitions of other businesses. While important, it is not necessarily a measure of expected earnings. Cash flow from operating activities, which reflects the cash inflows and outflows related to a company's core business operations, is often considered the most important category on the cash flow statement as it provides insight into a company's ability to generate cash from its day-to-day activities.

Cash Flow from Investing Activities Is Considered the Most Important