Friday, October 31, 2008

Benefits of cash flow statement

1. Dual checkness
By making cash flow statement we can check our cash book with cash flow statement, because when we add opening balance of cash book in net cash flow, it must equal to the closing balance of cash book.
Evaluation of cash position of business :-
With making of this statement an accountant of company can easily estimate the position of cash of business at present time. Because while we are making cash statement we care all changes of cash between two period .After this we can easily see then net changes in two periods relating to cash.
3. Comparison of two companies in same industry
With making of cash flow statement we can compare two companies cash position and calculate which companies cash position is better. Then we find the reasons of this.

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