Discuss the importance of measuring cash flows

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Question

1) Common tools of financial statement analysis such as horizontal analysis, vertical analysis and ratio analysis have helped to uncover fraud by identifying amounts that are out of line with expectations. Discuss how these tools can help to identify fraud schemes early and whether they are useful in preventing frauds overall.

2) Discuss the importance of measuring cash flows for a business. How could a manager benefit from using a Statement of Cash Flows on a routine basis? What considerations should be made relating to noncash activities that may not appear directly within the Statement of Cash Flows but rather in the notes? Give specific examples where useful.

Reference no: EM132324814

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