The report considers how companies can answer investors’ questions about how a company generates cash and how it intends to use that cash.

The report also provides practical guidance on how companies can give more information and context around its cash disclosures, beyond those in the cash flow statement including business model disclosures, capital allocation frameworks, reverse factoring arrangements and many others.

To create the report, the FRC interviewed 15 investors to discover their needs on cash-related disclosure. The interviews revealed that investors wanted to know How much cash is being generated from the operations of the business, both in the current period and future.

They also wanted to know if generated cash is likely to be sufficient to meet the company’s strategic objective and, if not, where will the required cash come from.

Investors were also interested in knowing what the company is planning to do with the cash it generates, especially beyond servicing its current operations.

Finally, the survey indicated that investors wished to know if management being effective and efficient in its use of cash.

The FRC has revealed that to answer these questions, the investors want cash disclosures which provide a clear description of the drivers of current (and future) performance and position, in the context of cash, supported by appropriate metrics.

Similarly, the report indicates that investors desire cash disclosures which provide ample details about the sources of cash now and in the future. They also want disclosures that detail the uses of cash in the past and future.

The report contains several examples of business disclosures on the sources and uses of cash to help the reader understand and learn of the desires of investors.