Which of the following is one of the purposes of the statement of cash flows?
A)to predict future profit growth
B)to calculate the turnover of inventory
C)to evaluate the level of debt and leverage of a company
D)to predict the ability of a company to pay debts and dividends

Question

Quizplus · Accepted Answer

The statement of cash flows helps to predict the ability of a company to pay debts and dividends by showing the inflow and outflow of cash during a specific period of time. It separates cash flows into three categories: operating activities, investing activities, and financing activities. By analyzing these categories, investors can assess whether a company has generated enough cash to pay its debts and distribute dividends.

Which of the Following Is One of the Purposes of the Statement