What is the Link Between the Statement of Cash Flows and the Income Statement? In a general sense we can say that they b

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answerhappygod
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What is the Link Between the Statement of Cash Flows and the Income Statement? In a general sense we can say that they b

Post by answerhappygod »

What is the Link Between the Statement of Cash
Flows and the Income Statement?
In a general sense we can say that they both show the same thing
but with different timing. The income statement shows the values
when they are earned or incurred, while the Operating section of
the statement of Cash Flows show when those values are realized
into cash. It's important to relate these because companies that
claim to earn lots of profits but can't back it up with cash
realization related to those profits may be giving us false
information.
Analyst understand there will be timing differences between both
but there must also be a certain degree of correlation as well.
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