By John M Seeram
John M. Seeram is a Financial/Audit Consultant
International financial reporting standards require entities to produce a Statement of Finan-cial Position (SFP) formerly known as the balance sheet, a Statement of Comprehensive Income (SCI) and a Statement of Cash Flows (SCF). From a financial management perspective, each of these statements is significant and they are inter-related. However, the focus will be on the SCF.
Managing cash resources are of utmost importance, whether it be a public or private entity. It is the view that the emphasis on evaluating an entity’s financial performance is more focused on the SFP and the SCI by the financial ratios being computed for making decisions accordingly.
A SCF became mandatory since 1987, as it records the amount of cash and cash equivalents entering and leaving an entity. This statement allows investors to understand, for example in the case of a corporate entity, how its operations are running, where the money is coming from, and how it is being spent.
