Reference no: EM131520312

The Statement of Cash flows have become one of the most important financial documents. It is possible to a huge net loss while still generating significant positive cash flows (using depreciation as an example). It is even possible to have billions of dollars in net losses with no effect on the cash position by merely writing off a single item (such as goodwill). It is possible to have a rapidly growing profitable business and become insolvent because one did not manage their cash flow. As it can be seen, the statement of cash flows is extremely important in helping the analyst determine what is happening with corporate finances.

The Statement of cash flows is broken down into three major parts: cash flow from operating activities, cash flow from financing activities and cash flow from investing activities. By carefully studying these documents you can determine the source and use of corporate funds.

Corporations have numerous methods of “manipulating” their books. Some methods are legal some methods are not legal. Based upon your reading in the book, your research on the internet and previous classes please discuss the methods you, as a financial manager could improve gross profit, operating profit and net profit margins.