What does a company analyze through its Cash Flow Statement?

A Cash Flow Statement provides vital insights into a company's financial health, specifically relating to its liquidity and cash management strategies. By analyzing this statement, a company can assess its reliance on external finance as well as its ability to manage cash flows effectively.

The Cash Flow Statement categorizes cash inflows and outflows from operating, investing, and financing activities, allowing stakeholders to understand how cash is generated and utilized within the business. This analysis is crucial for identifying whether the company can sustain its operations, meet short-term obligations, and finance its growth without overly depending on external financing sources, such as loans or investors. Therefore, the correct answer highlights the importance of evaluating both the reliance on external finance and cash management, which are key factors in maintaining a company's financial viability.