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The cash flow statement provides information which is not available from balance sheets and income statements.
- It may assist users of financial statements in making judgements on the amount, timing and degree of certainty of future cash flows.
- It gives an indication of the relationship between profitability and cash-generating ability, and thus of the quality of the profit earned.
- Analysts and othe users of financial information often, formally or informally, develop models to assess and compare the present value of the future cash flow of entities. Historical cash flow information could be useful to check the accuracy of past assessments.
- A cash flow statement in conjunction with a balance sheet provides information on liquidity, viability and adaptability, but the information is incomplete for this purpose as the balance sheet is drawn up a particular point in time.
- Cash flow cannot easily be manipulated and is not affected by judgement or by accounting policies.
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