An analysis of the statement of cash flows can help a firm prevent cash shortages.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the inflows and outflows of cash in a business, which can help the firm identify any potential cash shortages and take proactive measures to prevent them. By monitoring the cash flow statement regularly, a firm can ensure that it has enough cash to meet its expenses, pay off debts, and fund its growth initiatives. This can help prevent cash shortages and ensure the long-term viability of the business. Therefore, the given statement is true.

An Analysis of the Statement of Cash Flows Can Help