Operating activitiesfree cash flow | Business & Finance homework help
For example – if a company’s investment activities are mistakenly classified as operating activities, this will result in higher operating cash flows which would lead to an overstatement of free cash flow. Alternatively – if costs associated with restructuring or legal proceedings are incorrectly identified as investing activities; this could lead to an underestimation of free cash flow figures.
Ultimately – it is essential that companies ensure their financial statements are accurate and up-to-date! By taking time to review them regularly and make necessary corrections – businesses can rest assured that any decision making based on their reports will be equitable and well informed.