What is the primary purpose of a cash flow statement?

The primary purpose of a cash flow statement is to provide a detailed breakdown of cash inflows and outflows within an organization, categorized into three main activities: operations, investments, and financing. This statement is a crucial financial document that helps stakeholders understand how cash is generated and spent over a specific period.

By analyzing the cash flow statement, management can assess the liquidity position of the organization, understand the cash cycle, and make informed financial decisions. It reveals the ability of the organization to generate cash from its operations, which is essential for sustaining daily activities, funding future projects, or meeting financial obligations.

The other options address different aspects of financial management but don't serve the primary function of the cash flow statement. For instance, summarizing all assets pertains to the balance sheet, projecting future earnings relates to financial forecasting, and recording employee salaries and benefits falls under payroll and human resources management. Each serves an important role, but none fulfill the specific purpose of a cash flow statement.