Final answer:
Users of the statement of cash flows prefer companies that generate cash from operating activities, indicating a profitable core business. Companies can access capital by borrowing or selling stock, each with specific financial obligations or control implications.
Step-by-step explanation:
Investors, creditors, and other users of the statement of cash flows generally prefer enterprises that are able to generate cash from operating activities. This preference is because cash from operating activities indicates that a company's core business is healthy and self-sustaining, capable of generating profits by reinvesting profits back into the business. When companies need to access financial capital, they have options such as borrowing through banks or bonds, and selling stock. However, each of these options comes with trade-offs between control, obligations, and the potential dilution of ownership.
Borrowing through banks or issuing bonds requires the firm to make interest payments regardless of income, which can strain financial resources. Selling stock involves relinquishing some control as the company answers to a board of directors and shareholders.