Explain-1 why would users want to see cash flows broken out, Ask an Expert

Accounting

Explain:-
1. Why would users want to see cash flows broken out into three parts (operating, investing, and financing)? What's the purpose of this structure?
2. Companies often use Accounts Receivable to finance sales and Accounts Payable to finance short-term bills: so why aren't these listed as Financing Activities?
3. Depreciation is a method for allocating the cost of a long-term asset over the time of its use: so why is Depreciation Expense listed as a Cash Inflow?
4. Earnings Quality is a widely-used ratio in many industries: what does it mean? When is it more/less important? Why would investors/creditors care?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9612563

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