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Financial and Strategic Management of Projects - Essay Example
Finance & Accounting
Pages 3 (753 words)
1) Cash flow is regarded as any activity conducted during the course of the business which affects the cash account of a company. In accepted accounting principles, cash is regarded as financially liquid cash and other cash equivalent. From the true business perspective, CEOs of the company are always interested in evaluating the income the company is generating, and cash flow analysis is the most authentic for it…
The analysis of cash flows assists the CEOs and other top officials in ensuring that the investments made by the company is giving adequate return and company’s funds are not tied up in all the wrong ventures. Such an analysis cannot be made via Balance sheet analysis which represents the value of the assets on historical cost or the market value. From the perspective of a newly launched company, it is of prime importance to the management to ensure whether the operations are being conducted in the most prudent manner and are generating sufficient cash flows. Cash stream is considered to be the lifeline in the financial stability of any organization, and cash flow analysis plays a significant part in cautious cash management planning References  “Importance of Cash Flow Statement” accountlearning.blogspot.com. Account, n.d. Web. 16 July. 2011.  “Importance of Cash Flow Statement” buzzle.com Buzzle.com, n.d. Web. 16 July. 2011. 2) Ratio analysis is a very accurate and reliable tool when it comes to analyzing the financial outlook of a bank. ...