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Article: The Cash Flow Statement: Problems with the Current Rules
- Article from:
- The CPA Journal
- Article date:
- March 1, 2007
- Author:
CopyrightCopyright New York State Society of Certified Public Accountants Mar 2007. Provided by ProQuest LLC. (Hide copyright information)
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In recent years, the statement of cash flows has received increasing attention from readers of financial statements. The cash flow statement gives vital information about a company's performance, as well as its major activities during the year; however, some of the rules for preparation make the cash flow statement less useful than it should be.
The weaknesses with the cash flow statement can be divided into five sections: 1) differences between commercial and industrial companies versus financial institutions; 2) problems with operating activities; 3) problems with investing activities; 4) problems with financing activities; and 5) the role of free cash flow. The authors offer potential ...