Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. (True/False)

Question

Christopher Hardy

Business

15 March, 09:45

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. (True/False)

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Arabella Ferguson · Answer 1

False

Explanation:

As with the preparation of cash flow statement management analyses the nature of transactions in cash.

As generally, the financing and investing activities are not recurring in nature, and operating activities happen generally, the main cash revenue and maximum percentage is realized from operating further, in case activities are from financing and investing the there is an analysis to ensure the quantum and need of such activities.

Therefore, management not only analyse the cash flow level but also the cash flow source properly.

Thus the above statement is FALSE.