Cash Flow analysis is superior to Accounting Ratio analysis. There are many reasons for cash flow analysis being superior. But first let me explain what cash flow analysis entails. The main purpose of the cash flow statement in a business is to focus on the cash out flows and the cash inflows during an accounting period. It is a statement explaining the movement in the cash position of a business or firm. One of the main reasons that cash flow is superior to accounting ratio analysis is that with out the cash flow analysis being used in a business, the business would not be able to budget its cash and in addition the profit and loss accounts on the balance sheet wou
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