Certified Professional Contract Manager (CPCM) 2025 – 400 Free Practice Questions to Pass the Exam

A cash flow statement is designed to provide a clear view of how cash moves in and out of a business over a specific period. It categorizes cash flows into operating, investing, and financing activities, thereby offering insights into the company's liquidity and financial health.

By reporting the inflow and outflow of cash, the statement helps stakeholders understand how well a company generates cash to fund its operations, pay debts, and support growth initiatives. This information is crucial for understanding a company's ability to meet short-term obligations and is distinct from other financial statements like the balance sheet, which focuses on assets and liabilities, or the income statement, which reports revenues and expenses.

The correct choice effectively captures the primary function of a cash flow statement, highlighting its role in presenting the flow of cash within the business. Other options, while related to different aspects of financial reporting, do not accurately describe the purpose or content of a cash flow statement.