Фінансово-кредитна діяльність: проблеми теорії та практики (Sep 2019)

IMPROVEMENT OF TOOLS FOR CASH FLOW ANALYSIS OF E-COMMERCE COMPANIES

  • I. Khoma,
  • O. Kostiuk-Pukaliak

DOI
https://doi.org/10.18371/fcaptp.v3i30.179640
Journal volume & issue
Vol. 3, no. 30

Abstract

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The article is devoted to the study of new methods of cash flows analysis at e-commerce enterprises. The study of these methods included an investigation of some historical facts that served as an impetus for the development of a methodology for assessing the enterprise’s reliability in terms of its investment attractiveness. The history of the financial crisis that occurred in the USA during 2001—2004 and is widely known as the dotcom bubble is investigated. The approach to assessing the performance of the company in terms of profits completely discredited itself, which led to the bankruptcy of many companies, the opening of litigation for abuse and fraud by equity funds, and the loss of confidence in the IT industry as a whole. After this crisis, the approach to assessing the effectiveness of e-commerce changed, thus, the efficiency of the company’s activity was analysed not by profit, but by cash flow. Nowadays, the concept of free cash flow is introduced for analysing the investment attractiveness of enterprises. The article shows the value of a free cash flow indicator, which became an alternative in determining the effectiveness of both e-commerce enterprises and traditional sales methods. Taking into account the fact the crisis in the IT industry was caused by the overestimation of the value of enterprises in this sector, this indicator is important for determining the efficiency of Internet-based enterprises. Considering the conditions of economic performance, namely, the financial system in which entrepreneurship takes place, it is expedient to interpret the free cash flow indicator according to the factors of influence on the enterprise’s activity. In this study, for the purpose of determining the effectiveness of e-commerce companies, the use of an interpreted free cash flow indicator is offered, i.e. a net free cash flow that takes into account not only the interest in continuous investment for business growth but also reflects the ability of an enterprise to pay off the bank loans and dividends. Considering the investor interests, it will enable the company to be sure in a long-term financial support and development opportunities in the future.

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