What is a cash flow statement primarily used for?

A cash flow statement is primarily used to provide insights into the cash inflows and outflows of a company over a specific period. This financial report details how cash is generated from operations, investments, and financing activities. It allows stakeholders, such as management, investors, and creditors, to assess the company’s liquidity, financial flexibility, and overall cash health.

Understanding cash flow is vital for determining how well a company can generate cash to meet its obligations and fund its operations without relying solely on profits. This statement helps in evaluating the timing and certainty of cash flows, which is crucial for day-to-day functioning and long-term investment decisions.

The other options refer to areas not primarily associated with the cash flow statement. Analyzing stock market trends involves broader market performance analytics, tracking inventory pertains to managing goods and materials rather than cash, and evaluating employee performance focuses on human resources metrics rather than the financial aspects captured in a cash flow statement.