Starter 17-1 (book/static) Question Help Describe how the cash flow statement helps investors and creditors perform each of the following functions: 1. Predict future cash flows. 2. Evaluate management decisions. 3. Predict the ability to make debt payments to lenders and pay dividends to shareholders. 4. Show the relationship of net income to cash flow. 1. The cash flow statement helps predict future cash flows by reporting past which are good predictors of future cash flows. cash receipts and payments 2. The cash flow statement helps evaluate management decisions by reporting on managers' investments 3. The cash flow statement helps predict the ability to make debt payments to lenders and pay dividends to shareholders by reporting where cash came from and how cash was spent 4. The cash flow statement helps show the relationship of net income to cash flow by reporting in the first section of the cash flow statement. A company's cash balance can when net income is high, and cash can when net income is low due to timing and accrual-based accounting. Poor cash flow from operations is a warning signal that a company may be in financial trouble