Final answer:
Balance sheets are useful for evaluating the capital structure, assessing future cash flows, and computing rates of return but are not designed to analyze cash inflows and outflows for a period, which is the task of the statement of cash flows.
Step-by-step explanation:
Balance sheet information is useful for many aspects of financial analysis but not for analyzing cash inflows and outflows for the period. This is because the balance sheet provides a snapshot of a company's financial position at a specific point in time, including its assets, liabilities, and shareholders' equity.
To evaluate capital structure, the balance sheet is essential as it shows the mix of debt and equity financing. It can help investors understand the company's leverage and financial risk. When assessing future cash flows, the balance sheet can offer insights into the company's liquidity and its ability to generate cash in the future, but it does not directly show cash flows. Lastly, the balance sheet can be employed to compute rates of return, such as return on assets or return on equity, by providing the necessary values of assets or equity.
However, analyzing cash inflows and outflows for the period is better served by the statement of cash flows, which provides a comprehensive look at how cash is being generated and used over a period of time. Therefore, this function is not a direct use of the balance sheet.