STATEMENT OF CASH FLOWS - A MEASURE OF OPERATIONAL PERFORMANCE ON AN ACCRUAL BASIS

Abstract

Statement of cash flows presents useful information about changing the company's financial position, allowing to assess the enterprise’s ability to generate future cash flows and cash equivalents in the operating, investing and financing activities and their appropriate use. Treasury of an economic entity can be considered its strong point. The manner in which they manage money and financial flows, the final outcome will depend on the respective entity. Treasury is also an essential and main restriction of the financial management of the enterprise. Treasury embodies the results of operations and how to achieve financial balance of compliance. Not always an entity that ends year with benefits, has a positive cash (cash at bank and in availability). And this, because the gap between the recording and accounting of revenue and expenditure receipts and payments as they fall due, that gap can be decisive for the fate of the enterprise. This is a major requirement of the accrual. Therefore, an efficient management of the economic entity comprises both the asset management flows (revenues / expenses) and cash management, i.e. the flows of receipts and payments. The statistical evidence shows that most of the failures are due to weaknesses in treasury management.

Keywords

• treasury
• cash flows
• accrual
• IAS/IFRS