IAS 7 Statement of Cash Flows requires an entity to present a statement of cash flows as an integral part of its primary financial statements.

a. In terms of usefulness, provide an explanation as to how the cashflow statement is linked to the other main financial statements.

b. The statement of cashflows contains three major sections. What are these sections? Provide examples of the cashflows that can be found in each section.

c. Discuss reasons why a business might report a healthy profit in its financial statements and yet suffer severe cash problems.