Which accounting statement best addresses the fact that firm that protifable on paper will be force bankruptcy

Question

statement of cash flow
balance sheet
income statement
depreciation schedule

Answer 1

Statement of Cash Flows.

Enron was a good example of this. There were about 15 world-class brokerages and banks who were bankrolling all of Enron's pet projects during the late 90s and only one employee at Meryll Lynch rated Enron as a "sell" that whole time.

He did it by looking at their statement of cash flows. Enron was reporting high profits, but they weren't bringing in any cash from the sales, and the cash reconciliation function on the statement showed it clearly.