The Cash Flow statement is important since it describes the cash situation of the firm.
Cash is the lifeblood of firms.
Firms need cash to pay suppliers, employees, and conduct their business. If firms cannot pay their bills and wages, they have to close. This problem is the basic reason for the demise of many high-technology firms in 2000. The Cash Flow statement indicates the balance of cash flow. Net working capital is the difference between current assets and current liabilities.