The section "benefits of knowing your cash position" does not clearly highlight the benefits. It only gives the three main areas of a cash flow statement. Although these areas do indirectly highlight the benefits of knowing your cash position, perhaps mentioning a few other benefits would have added further clarity. The following benefit, for instance, could have been added: Companies that know their cash position well are in a much better situation to provide their stakeholders with better information that they need to assess the financial well being of the company. This in turn maybe important when a company is trying to obtain a loan and needs to provide its cash position to the lender. Similarly, other stakeholders such as investors, stockholders, customers, etc. may also require this information.
No example is mentioned when explaining the third area of the cash flow statement: Cash from financing activities. The Microsoft example should be extended to clarify this section of the cash flow statement as well.
This essay does not completely explain how cash is the life blood of any business. The importance of cash and preparing cash flow statements has only been inadequately explained in the beginning. The word "life-blood" has not been emphasized. In other words, the writer has only explained how cash can aid businesses and help different forms of business better predict their cash needs and perform their tasks well. However, the writer has failed to illustrate that before helping businesses, more important is the fact that cash is a necessity- a source of survival for businesses and they not only need cash to help them do their tasks better but they need cash to survive-it's a "have cash or die" situation. I believe highlighting this point is essential considering the topic of this essay requires an explanation of how cash is the life blood of any business.
The conclusion only mentions the importance of cash flow statements and not cash in general even though the tag line of the topic only mentions cash. There is no mention of cash flow statement in the tag line. Although cash flow statements ultimately boil down to the importance of cash, mentioning the importance of cash in general and not specifically cash flow statements would have been more appropriate.
Essay 3 (Nadrah):
Although the essay starts with a quotation, the writer directly jumps off to explaining cash flow statements. Perhaps explaining one or two lines about the importance of cash in general and cash being the life blood of any business would have been more appropriate.
The essay mentions a very strong point: " all the three statements above, when integrated, are required to make and support interrelated financial decisions." This point has been explained and elaborated extremely well and could not have been done with any more perfection.
There are some concepts that have not been explained too well. Consider, for instance, the concept of free cash flow hypothesis. The writer only states that "According to the free cash flow hypothesis, managers may choose to expand operations because their incentives are not aligned with firm value maximization." This explanation is not by itself