Which of the following statements is true regarding cash flow per share?

The statement that cash flow per share provides investors insight into the liquidity of a company is accurate. Cash flow per share is a financial metric that represents the amount of cash generated by a company on a per-share basis, which can help investors assess the company’s ability to generate cash from its operations. Understanding a company’s liquidity is crucial, as it indicates how well the company can cover its short-term obligations and operational costs. A higher cash flow per share suggests that the company has more liquidity, which can be a positive indicator for investors looking for investments that can sustain ongoing operations and grow.

Other options either misdefine the metric or talk about concepts that are not directly related to cash flow per share. For instance, dividing total sales by the number of shares does not reflect cash flow and can give a misleading representation of company performance. Similarly, cash flow per share does not directly indicate profit retained, as it focuses on cash generation rather than profitability. Lastly, while cash flow can be related to revenue, it is not derived directly from total revenue but rather from the actual cash generated after accounting for expenses and variations in working capital.