Question

One of the purposes of the statement of cash flows is to​ ________. A. determine the operating income of a business B. predict the ability of a company to pay debts and dividends C. evaluate the level of debt and leverage of a company D. to calculate inventory turnover

Answer 1

Answer: Option B

Step-by-step explanation: In simple words, statement of cash flows refers to a financial statement prepared by the organisation for identifying the sources and uses of cash in a single year.

It provides an insight to the investor regarding the liquidity of the company that if the the company is able to meet its short term and long term liabilities like paying dividend and interest etc.

Hence from the above we can conclude that the correct option is B .