What is the purpose of the statement of cash flows?

The correct choice highlights the essential purpose of the statement of cash flows, which is to provide valuable information regarding a company's cash inflows and outflows over a designated period. This statement is crucial for understanding how a company generates and uses cash, which is fundamental for its operational sustainability.

Cash flows are categorized into three main activities: operating, investing, and financing. By examining these categories, stakeholders can assess the company's liquidity, solvency, and overall financial health. This information is particularly important for investors, creditors, and management, as it allows them to make informed decisions based on the company’s short-term and long-term cash management strategies.

In contrast, while tax obligations and long-term revenue potential are important aspects of financial analysis, they are not the primary focus of the statement of cash flows. The statement primarily concerned with cash movements does not directly detail strategies for cash management, which would be more relevant in a broader financial planning context or in specific management reports.