Hazelton Properties Ltd., a real estate developer, has experienced ten years of growth in net income. Nevertheless, the business is facing bankruptcy. Creditors are calling all Hazelton Properties Ltd.'s outstanding loans for immediate payment, and the cash is simply not available. Where did Hazelton Properties Ltd. go wrong? Managers placed too much emphasis on net income and gave too little attention to cash flows.
Required
Write a brief memo, in your own words, to explain for Hazelton Properties Ltd. Managers the purposes of the cash flow statement.