What is cash flow statement and how it impacts a company?

First of all, I am not a charted accountant to provide in financial terms. But as an ERP implementor, I can say CASHFLOW is very important for any company at the sametime statement gives indication to CFO to make decicions and also it helps CFO to plan financial activities accordingly

In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals with cash flow statements.

The statement of cash flows provides information on the cash receipts and payments for a specific period of time. The statement of cash flows reports (1) the cash effects of a company’s operations during a period, (2) its investing transactions, (3) its financing transactions, (4) the net increase or decrease in cash during the period, and (5) the cash amount at the end of the period.

Reporting the sources, uses, and change in cash is useful because investors, creditors, and others want to know what is happening to a company’s most liquid resource. The statement of cash flows provides answers to the following simple but important questions.

1. Where did cash come from during the period?

2. What was cash used for during the period?

3. What was the change in the cash balance during the period?

 cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, in cash flow statement has three activities

1 cash flow from opreating activities

2 cash flow from financing activities

3 cash flow from investing activies

 

Cash flow statement shows how cash inflows have been generated and how the cash has been spent. A cash flow statement can provide information that is not available from balance sheets and income statements.

When a cash flow statement is used in conjunction with a profit and loss account and balance sheet it provides information on the liquidity, liability and adaptability of the the organization.

In financial accounting, a cash flow statement, also known as statement of cash flows,[1] is a financial statementthat shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet.[1] As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements.

People and groups interested in cash flow statements include:

• Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses
• Potential lenders or creditors, who want a clear picture of a company's ability to repay
• Potential investors, who need to judge whether the company is financially sound
• Potential employees or contractors, who need to know whether the company will be able to afford compensation
• Shareholders of the business.

I totally agree with Mr. Shahzad Yaqoob's very-well explained answer. Thanks