/dotdash_Final_Cash_Flow_Statement_Analyzing_Cash_Flow_From_Investing_Activities_Jul_2020-01-5297a0ec347e4dd8996f307b3d9d61ad.jpg "analyzing cash flow")
This would be a significant concern, as the entity cannot simply sell its properties again in the future.
This may mean that the entity’s overall cash position increases in the period, but is clearly not a sign that the entity has performed well. A situation could easily arise where an entity is struggling to generate cash in a period and is forced to sell its owned properties and lease them back in order to continue. An increase in this figure does not necessarily mean that the entity has performed well in the year. One of the first things to note is to not simply comment on the overall movement in the total cash and cash equivalents figure in the year. To do this, candidates must understand the different sections of the statement and the implications for the business.
The statement of cash flows is one of the primary financial statements, and FR candidates must be able to explain the performance of an entity based on all the financial statements including the statement of cash flows.
#Analyzing cash flow professional#
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