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Basic Question 4 of 10
Which financial statement shows whether a company met its liquidity goal?
B. Balance sheet
C. Statement of cash flows
A. Income statement
B. Balance sheet
C. Statement of cash flows
User Contributed Comments 3
| User | Comment |
|---|---|
| meghanchloe | why not also the balance sheet for from the balance sheet you can derive the solvency and liquidity ratio? |
| apiccion | The key-word here is 'met' (past tense). The company could have failed to meet it's liquidity goals, but still be liquid because it raised cash through a debt or equity issue, alternatively it could be selling off fixed-capital to feed liabilities. Inspecting the statement of cashflows one could determine that the company's operating cashflow was not sufficient to meet current liabilities. Therefore, the company failed to have *met* its liquidity goals. (Again, emphasis on past tense) |
| cong | C is better than A as the cash flow statement shows more directly whether the company is meeting its liquidity goals |
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Learning Outcome Statements
describe how the cash flow statement is linked to the income statement and the balance sheet
CFA® 2024 Level I Curriculum, Volume 2, Module 4.