Vol. 3, Issue 5 (2016)
Implications of Indian Accounting Standard (Ind AS – 7): Statement of Cash Flows under Financial Reporting
Author(s): Nikhil Singla
Abstract: The statement of cash flows contains important information that is often the foundation by which users evaluate performance. The diversity in how cash flows are reported reduces the comparability of cash flows and results in users needing to make adjustments when performing relative analyses. Credit rating agencies, investors, and analysts utilize cash flow information when developing valuation models. The transparency of historical cash flow information, including cash inflows and outflows from operating activities, can promote a better understanding of a company’s relative performance and enhance the predictive value of its cash flow results. Companies should consider whether their financial statements provide enough disclosure of how they report cash flows and the primary drivers and material factors giving rise to cash flow results. This paper describes the disclosure requirement, importance of cash flow statement, enhancing the usefulness of cash flow and reporting of cash flow statement.