What is a good response?
The balance sheet is used to show how a company's assets balance with it liabilities and shareholders' equity. The income statement displays the company's income during the financial period, including the expenses that affect its income. The statement of cash flows displays the company's incoming and outgoing cash from operating, financing, and investing activities.
The most important segment of the statement of cash flows is the cash flows from investing activities. This section shows the change in the company's capital assets. It is particularly important because it shows the company's growth, which is of interest to investors.
Investors should be able to analyze a company's statement of cash flows. It provides important information about the financial health of the company, such as its investment and financing activities, and can give an investor insight to the decision to invest. Unfortunately, many investors do not have the knowledge to appropriately understand a cash flow statement.