The section of the statement of cash flows that is generally considered to be the best measure of a company's ability to generate cash is:
A) each section gives an equal estimation.
B) cash flows from operating activities.
C) cash flows from financing activities.
D) cash flows from investing activities.

Question

Quizplus · Accepted Answer

Cash flows from operating activities provide the best measure of a company's ability to generate cash as it shows the cash generated or used in the company's core business operations. This section includes cash received from customers, cash paid to suppliers, and cash paid to employees, among others. The other sections (cash flows from financing activities and cash flows from investing activities) may provide additional information, but do not necessarily reflect the company's ability to generate cash from its operations.

The Section of the Statement of Cash Flows That Is