monitoring cash flow is important because it measures a company's ________.
Why monitoring Cash Flow is important for business. The cash flow report is the third component of a companyâs financial statements. The report portrays how a company has spent its cash, and is often used in tandem with the other two key reports â the Profit and Loss and the Balance Sheet. The cash flow report is important because it informs the reader of the business cash position. For a business to be successful, it must have sufficient cash at all times. It needs cash to pay its expenses, to pay bank loans, to pay taxes and to purchase new assets.