Response to the following problem:
Biz Mart Stores, Inc., has experienced an unbroken string of 10 years of growth in net income. Nevertheless, the business is facing bankruptcy. Creditors are calling all of Biz Mart's outstanding loans for immediate payment, and the cash is simply not available. Attempts to explain where Biz Mart went wrong make it clear that managers placed undue emphasis on net income and gave too little attention to cash flows.
Required:
Write a brief memo, in your own words, to explain to the managers of Biz Mart Stores the purposes of the statement of cash flows.