Solvency refers to a firm's ability to cover its liabilities with its assets. Cash flows from and used for financing activities does not help a user evaluate the company's continuing solvency.
Solvency refers to a firm's ability to cover its liabilities with its assets. The cash balance at the end of the period does not help a user evaluate the company's continuing solvency.
Solvency refers to a firm's ability to cover its liabilities with its assets. Cash flows from and used for investing activities does not help a user evaluate the company's continuing solvency.
Solvency refers to a firm's ability to cover its liabilities with its assets. If a firm is not able to generate a positive cash flow from its operating activities, it is or soon will be insolvent. Therefore, cash flows from and used for operating activities is the most important factor to consider when using the statement of cash flows to to evaluate a company's continuing solvency.
|
