Introduction
Cash flow statements are summaries of financial activities, which allow for controlling cash flows and addressing meaningful goals. For instance, according to Alijonovich and Akhmadjonovich (2022), to achieve the status of a company doing business in a global format, many organizations need advanced reporting mechanisms.
Discussion
Cash flow statements help accurately and effectively reflect the firm’s current financial status by demonstrating real earnings performance, budget allocations, and other activities. These data, in turn, are adequate reporting figures that are officially confirmed. Kamaluddin et al. (2019) also note the practical benefits of cash flow statements related to forecasting. Based on the information in these reports, the corresponding increase or decrease in productivity can be expected, which is also valuable information to consider when doing business. As a result, such statements serve as tools to monitor financial performance.
As an example, the latest Ford Motor’s cash flow statement can be analyzed. According to 2022 data, in 2021, the revenue of the corporation was $136.3 billion, which, compared to 2020 ($127.1 billion), allows for talking about the company’s significant success in the global market (Ford Motor Company, 2022). However, compared to 2019 ($155.9 billion), the figure is lower, which demonstrates the negative impact of the COVID-19 pandemic on Ford Motor’s financial performance (Ford Motor Company, 2022). Capital spending increased in 2021 compared to 2020 ($6.2 billion and $5.7 billion, respectively), indicating increased prices for components and production aspects (Ford Motor Company, 2022).
Conclusion
In general, when analyzing the company’s financial data, one can notice that the 2020 crisis did not doom the corporation’s activities to failure, and the interest on debt rate in 2021 exceeded that in 2020 slightly ($1.8 billion and $1.65 billion, respectively) (Ford Motor Company, 2022). All these nuances allow for stating that the company in question is running a successful business and is effectively overcoming the difficulties caused by the stagnation in global sales.
References
Alijonovich, M. F., & Akhmadjonovich, N. A. (2022). Importance of cash flow statement in transition to international standards of financial reporting. Central Asian Journal of Innovations on Tourism Management and Finance, 3(11), 103-107.
Ford Motor Company. (2022). 2021 annual report. Web.
Kamaluddin, A., Ishak, N., & Mohammed, N. F. (2019). Financial distress prediction through cash flow ratios analysis. International Journal of Financial Research, 10(3), 63-76. Web.