When a company uses several capital sources, it must determine the proper discount rate for valuing the cash flows of the company as a weighted average of the costs of the capital components.
The cash flow statement (CFS) offers details on the financial transactions, financing sources, and business operations of an organization. The CFS, also known as the statement of cash flows, helps creditors estimate how much cash is available (sometimes referred to as liquidity) for the company to cover operating expenses and pay off obligations.
Since it informs them of a company's financial soundness, investors evaluate the CFS equally. They might use the statement, as a result, to make better, more informed investing decisions.
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