(Learning Objective 1: Explain the purposes of the statement of cash flows) Bryant, Inc., has experienced an unbroken string of nine years of growth in net income. Nevertheless, the company is facing bankruptcy. Creditors are calling all of Bryant’s loans for immediate payment, and the cash is simply not available. It is clear that the company’s top managers overemphasized profits and gave too little attention to cash flows.
Write a brief memo, in your own words, to explain to the managers of Bryant, Inc., the purposes of the statement of cash flows.