5. cash flows "cash is king" for all businesses you can determine a company’s cash situation by analyzing its cash flow statement. the cash flow statement also determine whether the company (1) is generating enough cash from its operations to make new investments and pay dividends or (2) will need to generate cash by issuing new debt or selling its assets. if a firm has a lot of net cash flow, does that mean the firm’s cash account (as reported on its balance sheet) must be high? yes no the statement of cash flows reports a company’s cash inflows and outflows for a given accounting period by categorizing the company’s sources (inflows) and uses (outflows) of cash as either operating, investing, or financing activities. determine whether the activities described in the following table should be categorized as operating, investing, or financing activities in the statement of cash flows. activity operatingactivity investingactivity financingactivity fitzi chemical company earns revenue from its cash receipts from royalties.