statement of cash flows

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June 3, 2021 at 2:19 pm #622947
Jiya024
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Dear Professor,

Can you explain the below line, especially the “financial adaptability” what is that?

Statements of cash flows provide valuable information to stakeholders on the financial adaptability of an entity.

Many thanks!
June 4, 2021 at 9:41 am #623087
Stephen Widberg
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Adaptability = whether it will have enough money to cope:

1. In the short term – assessed in conjunction with liquidity ratios – e.g. inventory turnover, current ratio
2. In the long term – assessed in conjunction with solvency ratios – e.g. gearing.
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