Purpose of the Cash Flow Statement The statement of cash flow was required by the FASB, because the other financial statements did not pertain all the information necessary to provide great judgement on any company. Statements such as the balance sheet and the income statement could only provide financial data to a certain point (Kieso, Weygandt, & Warfield, 2013). The whole purpose of the …show more content…
It not only helps future and present investors and creditors, but it also helps the firm itself. The data provided shows the ability to pay debts, and respond to the changes in cash flow, due to “unexpected needs and opportunities” (Kieso, Weygandt, & Warfield, 2013). When assessing the financial strength of an organization, investors and creditors are able to make judgements on how well the company is able to handle business, and it is the best time to find flaws in their spending or the borrowing of money. The overall statement of cash flow is there to help prevent businesses from going future into debt, and also monitor where the organizations money is going. Being able to manage the organizations finances is key to a successful business, and if investors and creditors are able to see that though the statement of cash flow, there will always be potential for future