Purpose Statement of Cash Flow - Simple Example Company Directors, who are responsible for the governance of the company, and are responsible for ensuring that the company does not trade while insolvent.Potential employees or contractors, who need to know whether the company will be able to afford compensation.Potential investors, who need to judge whether the company is financially sound.Potential lenders or creditors, who want a clear picture of a company's ability to repay.Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses.People and groups interested in cash flow statements include: International Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals with cash flow statements. 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.
Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. 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.
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