When analyzing the statement of cash flows, which of the following statements is TRUE?
A)A company with a large cash balance is ensured success.
B)A shortage of cash can lead a company to bankruptcy.
C)Cash has no affect on the success of the company.
D)Cash is ignored when analyzing a company.

Question

Quizplus · Accepted Answer

A shortage of cash can lead a company to bankruptcy, making it an important factor to consider when analyzing the statement of cash flows. On the other hand, having a large cash balance does not necessarily ensure success as it could mean that the company is not investing or reinvesting in the business. Cash is not ignored when analyzing a company as it is a crucial component in determining liquidity and financial health.

When Analyzing the Statement of Cash Flows, Which of the Following