Prime Hotel Properties, a real estate partnership, has experienced an unbroken string of 10 years of growth in net income. Nevertheless, the business is facing bankruptcy! Creditors are calling all of Prime's outstanding loans for immediate payment, and the cash is simply not available. Attempts to explain where Prime went wrong make it clear that managers placed undue emphasis on net income and gave too little attention to cash flows.

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Write a brief memo, in your own words, to explain to the managers of Prime Hotel Properties the purposes of the statement of cash flows.