 The statement of cash flows is one of four primary financial statements. Of the four financial statements, the income statement, statement of stockholders' equity and the statement of cash flows are prepared for a period of time, like a month or a year. For example, these financial statements would be dated for the month-ended December 31st, 2015, or for the year-ended December 31st, 2015. And that difference would let investors and creditors know if the information was for one month or one year. The balance sheet, you recall, is for a point in time, so it tells investors and creditors about the financial position of a company on a specific date. The primary purpose of the statement of cash flows are these four items shown here. Let's look at each one in a little more detail. One of the purposes of the statement of cash flows is to predict future cash flows. Past cash receipts and payments are reasonably good predictors of future cash flows. Another purpose of the statement of cash flows is to explain the change in the cash account balance from the beginning of the period to the end. Comparable balance sheets show us the change in cash, but the statement of cash flows tells us why the cash balance changed. Another purpose of the statement of cash flows is to help investors and creditors determine a company's ability to pay dividends and interest payments. And finally, another purpose of the statement of cash flows is to explain the relationship between a cruel accounting net income and cash flows. Although high net income usually equates to strong cash flows, this is not always true. The history of business is littered with companies that went bankrupt while having record sales. So having strong cash flows is a positive signal of the financial strength of a company.