Question

A household functions like a small business. In both thehousehold and business settings, the importance of stable cash flowcannot be emphasized enough. Households and businesses mustmaintain good cash flow to meet their continued obligations shouldsomething happen or if there is an economic downturn. Planning forboth short- and long-term cash needs is important to both thehousehold entity and the business entity.

Of the four primary financial statements used in accounting,managers often indicate that the Statement of Cash Flows is themost beneficial statement, in their opinion. Why do you supposethey believe this particular statement to be so important? (5points)