Factor analysis of cash flows: methodological aspect and justification of management decisions

Abstract

Any company in the course of its activities deals with various cash flows, which need to be assessed, balanced and controlled. The basis for making managerial decisions is cash flow analysis, including factor analysis, which allows to identify cause-effect relationships and quantify the impact of factors on the cash flow. The paper presents the author’s approach and specifies the methodology of factor analysis of cash flows on the basis of direct and indirect method. Based on the results of the analysis, management decisions are recommended.