Needless to say that there are many reasons why companies can have a problem with cash flow, even if a business is doing well. Amongst them are unexpected late payments and non-payments, unforeseen costs, unexpected drop in demand and others. So managers using financial statements, especially the cash flow statement can offer solutions like credit and stock control, sales promotion to generate cash quickly or expenditure control.
To sum up, the main purpose of all these statements is to provide high quality information about the company’s current financial position and performance and to give further ground for making important managerial decisions. It is quite obvious that to reach these goals, the firm’s financial statements should be easy to understand, precise, reliable, relevant and comparable.
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