When it comes to public company disclosures, the statement of cash flows does not receive a great amount of attention. Seemingly a straightforward accounting of a company’s cash position, many preparers and investors spend more time debating the makeup of the balance sheet or income statement.
But for Counterpoint Global’s Michael Mauboussin, anyone that treats the cash flow statement as an “afterthought” is making a mistake. In his new research piece titled “Categorizing for Clarity”, he argues that the cash flow statement needs to be completely overhauled to keep pace with the ways that companies absorb and pay out their cash positions.
In this episode we speak to Mr. Mauboubissin about his proposals (which can be found in the episode’s show notes) and the issues that a confused cash flow statement brings up for both prepares and investors.