In making plans for the more immediate future (short-range financial planning), the management is vitally concerned with a statement of cash flows, which provides more detailed information. Such a statement is useful for the management to assess its ability to meet obligations to trade creditors, to pay bank loans, to pay interest to debenture holders & dividend to its shareholders. Furthermore the projected cash flow statements prepared month-wise or so can be useful in presenting information of excess in some month & shortage of cash in others. By making available such information   in advance, the statement of cash flows enables the management to revise its plans. Cash flow statements summarize sources of cash inflows & uses of cash outflows of the firm during a particular period of time. In the preparation of cash flow statement all the item that increase /decrease cash are included but all those items which have no effect on cash are excluded. Hence, it is essentially a tool of short term financial planning. Cash flow information is useful in assessing the ability of the enterprise to generate cash & cash equivalent & enables users to develop models to assess & compare the present value of the future cash flows of different enterprises.

The following two tabs change content below.
We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]

Leave a reply is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp

Log in with your credentials


Forgot your details?


Create Account