Task: The Statement of Cash Flows
Many users of the financial statements assert that the statement of cash flow is the most useful statement since companies preparing this statement cannot use creative accounting practices to create cash, and measures like free cash flow are used heavily in financial analysis. However, some opponents argue that rearrangement of certain items like dividends, prior period adjustments or capitalizing certain expenses permit manipulation of cash flow statement or preparing cash flow adequacy. Discuss whether each argument has merit. Please support your discussion with examples or research on this topic.