Final answer:
A strong statement of cash flows suggests a business is generating significant cash through its operations, which can be used for reinvesting in growth and ensuring financial stability during challenging times.
Step-by-step explanation:
A strong statement of cash flows indicates that significant cash is being generated by operating activities. This is a crucial sign that a business is healthy and capable of self-sustainment, as it can reinvest into its own growth and pay off debts. Reinvesting profits into equipment, structures, and research and development is one of the primary ways that established companies use their cash flow to grow. These investments can generate additional products, leading to more sales and thus a larger future cash flow. However, it's essential for businesses to have reliable sources of financial capital, such as profits, borrowing from banks, or issuing bonds, to support investments and ensure continuity during periods of low profits or losses.