Final answer:
The statement is false as both financial statements and cash flows are crucial for financial analysis. Accounting numbers provide a comprehensive overview, while cash flow analysis reveals the actual liquidity position, both essential for evaluating a company's financial health.
Step-by-step explanation:
The statement that financial statements and accounting numbers are more important than cash flows for financial analysis is false. While financial statements, which include the balance sheet, income statement, and statement of shareholders' equity, provide a comprehensive overview of a company's financial health, cash flows are equally crucial. Cash flow statements provide detailed information about the cash generated and used by a company in a specific period. Analysis of cash flows is critical for understanding the liquidity and long-term solvency of a business. It is not just about earning revenues; it is also about managing to collect and conserve the cash, which is essential for meeting short-term liabilities and for strategic planning.
Accounting numbers, which might be based on accrual accounting can sometimes present a distorted view of a company’s health, since they might recognize revenues and expenses before the actual cash transaction took place. On the other hand, cash flow analysis can reveal the actual liquidity position of a company, which is vital for evaluating its ability to sustain operations, grow, and meet its obligations. Therefore, both financial statements and cash flow analysis are fundamental to a thorough financial analysis and neither should be considered more important over the other.