Analysis of cash Flow- Cash flow analysis is very important for investor. The cash flow reveals the source and application of cash. By analysing cash flow investor is able to know the spending of cash. In which areas cash is utilised.

Analysis gives better picture of increase in cash. It gives a quick idea about net income converted in cash.

Cash flow is divided in three sections. One of which is “Cash from Operation”. By analysing this operational efficiency also analysed. It gives a better picture to correlate the cash flow from operation and net cash increase during the year. Because ultimately success of any business depends upon efficiency of operational activities

By analysing “Investing Activities” it can be viewed that how much company is interested in expanding its business. Capital expenditures give an idea of expansion of business. Just to earning from operational activities is not important. It is good to use that money for future expansion plans of business.

Financing activities shows how much value company is returning to its shareholder. From investor point of view it is necessary to receive income from investment consistently.

Hence it is better to investor analyse the cash flow. Rather looking balance sheet for increase or decrease in cash will not provide actual performance.