Analysis of Enterprise’s Cash Flows - Problems and Solutions in the Conditions of Crisis

Abstract

Summary:

The relevance of the issue of the enterprise’s cash flow analysis is determined by a number of circumstances. The analysis of incoming, outgoing and net cash flows, depending on the formation sources (operating, investing and financing), ensures efficient information for analysis and assessment of both current and future cash flows, as well as profitability, liquidity, solvency and financial flexibility of an enterprise. In the conditions of financial crisis such issues are crucially important since the information contained in the Profit and Loss Account does not reflect the time of incoming and outgoing cash flows and the impact of operations on liquidity and solvency. The present article is aimed at forming a methodology for cash flow analysis, its role both in the methodology for the analysis of the enterprise’s financial position and its place in the overall methodology for the financial and business analysis of enterprise’s operations. This article provides methodological guidelines for performing an analysis of company cash flow: an analysis of availability and use of cash and of solvency, liquidity and cash flow efficiency.