The importance of cash flows in the economic assessment of the mining projects

Abstract

The economic assessment and analysis of investment projects is aimed to show what the value will be achieved by the project for enterprise, region and wider community. The overall assessment of the project should be given by the investor, financier and ecology. The positive results of the project are certainly acceptable from the point of view of investors, but they do not have to be acceptable from the point of view of financiers and ecologists. This imposes a need for balancing the demands of all three sides. In the static evaluation of the project, the profit and loss account, profitability, is observed, which is higher than in costs, which is a gain (profit). In the dynamic project evaluation, the following cash flows are monitored: financial, economic and social. The financial cash flow points to the liquidity of the project during its lifetime, if the inflow is constantly greater than the outflow of funds, the project is liquid. The economic flow indicates the project profitability, period of return on investment, net present value and internal rate of return. The social cash flow deals with the national economy, excludes the government's contributions to cash outflows and determines the social net present value as well as the social rate of profitability.

Keywords

• economic assessment
• investment projects
• cash flows
• net present value
• profitability rate
• repayment period