Usefulness and purpose of the statement of cash flows

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Compare and contrast the points made regarding the usefulness and purpose of the statement of cash flows. What feedback can you give?

There are three types of cash flow. Operational cash flow cash receivers and spent because of company’s business activities.  This process is cash flows into a company from services that are provided to the community. The cash that is generated is used for payroll and company expenses; funds should be put aside for times when the company has a slow quarter.

Investment cash flow refers to cash received or spent through investing activities. This process is referred to buying and selling of goods to help your company grow or build your net worth.

Financing cash flow is cash received from loans that are paid out as a debt repayment.

This could be something as a company sells its stock, pays down debt and turn around repurchases its stocks, in short, it is called stock buyback.

Another finance cash flow situation could be if an individual or company is paying back loans or receiving loans and taking those funds paying down debt.  If an individual cannot repay back their loans or pay their debt this could result in losing your company or filing personal bankruptcy.

A good example of cash flow plays a big part in the world of sports especially baseball where you don’t have a salary cap. Teams in a big markets that have a lot of cash flow often sign the big stars like the New York Yankees, Los Angeles Dodgers, and Boston red Sox. These teams have lots of cash flow and can sign big name players because they have the cash up front to give them big signing bonuses. Small market teams like the teams in Canada, Colorado Rockies these owners are still billionaires, but they do not have the same cash flow as the Yankees.

Last Updated on June 8, 2020 by Essay Pro