Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 1 - Introduction to Financial Statements - Questions: 9

Answer

To ensure there is sufficient cash to fund growth and operations.

Work Step by Step

If excessive distributions are being paid, cash flow may be negatively impacted. The bank may want to ensure that cash flow is being managed responsibly to ensure the company remains viable and can repay its loan.
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