Cash Flow Estimation

Purpose of Assignment

The purpose of this assignment is to allow students the opportunity to understand the importance of cash flow and its usefulness in business.

Assignment Steps

Create a 150 Introduction-word summary explaining the importance of cash flow. ONLY INTRODUCTION

Cite in text with reference if needed to. Please No Plagiarism

Answer preview

Cash flow is the money movement either into or out of the business, project or products of finance that comes from investing, operating and financing activities. Cash flow statements are normally prepared during a given period which is the accounting period to provide information on the changes of company’s cash and its overall cash equivalents, its ability to buy and sell its own securities more also, its ability to borrow and repay loans (Brooks, 2015). The cash flows give a reflection of cash position that other accounting statements cannot give. They are indeed useful in helping the managers, creditors, and investors to determine the current value of the company as well as company’s ability to meet its current financial obligations; in addition, it enables to calculate an entity’s present liquidity. The financial profits do not necessarily mean an entity is liquid. Furthermore, it helps the management to develop the internal rate of returns and net present values to use in financial models for running the company (Wild, 2015).(191words)