What is the primary purpose of the statement of cash flows in financial reporting?

The primary purpose of the statement of cash flows in financial reporting is to provide a detailed account of cash inflows and outflows during a specific period. This statement is crucial as it helps stakeholders understand how a company generates and uses its cash, which is vital for assessing the company’s liquidity, financial flexibility, and overall financial health.

The emphasis on cash transactions, as opposed to non-cash items such as those reflected in the income statement or balance sheet, allows for a clearer picture of actual cash movements. This information is essential for decision-making, particularly for assessing a company's ability to meet its obligations, invest in growth opportunities, and navigate financial challenges.

In contrast, the other options focus on different aspects of financial reporting that do not encapsulate the core intent of the statement of cash flows. Profit margins relate more to the income statement, while a company's financial position relates to the balance sheet. A summary of all invoices issued does not reflect cash transactions but rather accounts receivable, which is not the primary purpose of the statement of cash flows.