ABSTRACT
CASH FLOW STATEMENTS FRS 1/IAS 7 (but not the Companies Act) requires medium and large UK companies (see page 10) to publish a cash flow statement as part of their annual accounts. Its aim is to show cash flows during the year into and out of a company. This is ‘in order to assist users of the financial statements in their assessment of the reporting entity’s liquidity, viability and financial adaptability’. As with financial ratios, looking at cash flow figures over several years is often more useful than the results for a single year.
