What flows are considered relevant in cash flow analysis?

In the context of cash flow analysis, cash flows that affect financial performance encompass a broad range of inflows and outflows from various activities, including operating, investing, and financing activities. This perspective highlights the importance of understanding how all types of cash flows impact the overall financial health of an entity.

Operating activities include the core revenue-generating activities of the business, while investing activities pertain to cash flows from the acquisition and disposal of long-term assets. Financing activities involve cash flows related to obtaining and repaying capital. By recognizing that cash flows from all these categories are relevant, one can assess not only the liquidity of the organization but also its ability to generate sustainable profits and manage investments effectively.

The other options limit the scope of analysis. Focusing only on inflows from operating activities or outflows from investing activities ignores critical aspects of how a company funds its operations and growth. Additionally, considering both inflows and outflows unrelated to operations does not provide a full picture of how cash flows, regardless of their source, can influence financial performance. Hence, appreciating the relevance of all cash flows that affect financial performance provides a comprehensive view of a business's cash position and operational efficiency.