Flow Statement Term Paper:
Cash flow statement is the statement of the company about the sources of money and their use at the definite period of time. This statement reflects a detailed picture of the profit of the firm and the classification of its sources and the firm’s expenditures and their detailed analysis. Cash flow statement is a perfect indicator of the company’s performance, because it illustrates the company’s profit and expenditures during the definite period and this information is able to provide the expert with the information about the origin of cash, the purpose of expenditures, the sums, etc. The history of the development of the issue on writing a cash flow statement is quite old and it dates back to the middle of the 19th century. At that time was the starting point of intensive industrialization and every firm of that time began to control the sum of the profit and expenditures and their sources scrupulously because of the mass production and increased responsibility.
The competition between the firms became high they began to earn capital more intensively. The modern form of cash flow statement writing appeared in the USA in 1988 and included the division of cash flow into the definite categories – operational, financial and investment activity. The quality cash flow statement helps managers to see the actual profits and expenditures of the firm; the origin of the cash and the fields of its use; help to create the strategy of the increase of the profit and reduction of expenditures; etc. So, it is obvious that the statement is the integral part of the financial analysis of the company which evaluates the objective current financial condition of the firm.
Cash flow statement is the indicator of the company’s profit and expenditures and the student will find it interesting to observe the problem attentively. The young person is able to dwell on the explanation of the statement, its value, importance and relevance for business. One is able to observe the matter form the historical point of view trying to illustrate the problem on the definite examples from the past comparing the cash flow statements of different years with the modern ones.
Then, one should define the purpose, aim, sphere and methods of writing the statement and look through the standards of cash flow statements of different countries.
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