Convincing the Old-Timers of the Need for Cash Flow Data
Response to the following problem:
You are the chief accountant for Harry Monst Company. The president of the company is a former accountant who worked her way up through the management ranks over the course of 30 years. She is a great manager, but her knowledge of accounting is outdated
Harry Monst Company has a revolving line of credit with Texas Commercial Bank. A new loan officer has just been put in charge of the Harry Monst account. The new loan officer is surprised to see that Harry Monst has not been submitting a statement of cash flows along with the rest of the financial statements that comprise the annual loan review packet. The new loan officer called you and asked for a statement of cash flows.
You were surprised when you took the completed statement of cash flows to the president for her signature. She refused to sign, stating that she had never looked at or prepared a statement of cash flows in her career and she wouldn't start now.
Write a one-page memo to the president with the objective of convincing her of the usefulness of the statement of cash flows.