Final answer:
A strong statement of cash flows indicates that significant cash is being generated by reinvesting a portion of the profits made by the business.
Step-by-step explanation:
A strong statement of cash flows indicates that significant cash is being generated by reinvesting a portion of the profits made by the business. When a company reinvests its cash flow into improving its factories, hiring more employees, or purchasing technology, it can produce more products, leading to increased sales and a larger cash flow in the next sales period. As long as the reinvested cash flow is greater than the depreciation on the equipment, the company can continue to grow.