Abstract
A very urgent problem of formation of cash flows in conditions of the competitive market is considered in the present article. Cash flows are defined as the inflows and outflows of cash and cash equivalents, created within a certain period of time out of the operating, financial, investment and extraordinary activities of the company. Examples of cash flows out of the operating, financial and investment activities of the company are adduced. The system of formation and evaluation of the information about cash flows is created. Its principal elements are as follows: cash flow accounting, classification of cash flows, issuing of the cash flow statement, control and analysis of cash flows, cash flow forecasting. The methods of analysis of cash flows are created, i.e. the horizontal analysis of the cash flow statement; the vertical analysis of the cash flow statement; the analysis of financial ratios of the cash flow statement; preparation of the cash flow forecast. Practical application of the system of formation and evaluation of the information about cash flows would help the company managers to take various management decisions on evaluation of the company's financial condition and its activity results better, quicker and more precisely.
Highlights
Each operating company seeks for gaining a larger profit and for continuity of its activity
According to the 7-th International accounting standard, it’s important to reveal the cash flows out of the financial activity because it is useful for forecasting claims of the capital suppliers of the company towards the cash flows within the future periods (IFRS 2004: 638)
This information is extremely valuable while taking the decisions on management; 4) the information from the cash flow statement helps to evaluate the value of the funds for the current moment and for the future; 5) importance of the information about cash flows for the state institutions, which create the state budget and control the dues collection
Summary
Each operating company seeks for gaining a larger profit and for continuity of its activity. The companies, which seek to be competitive and to strengthen their position both at the local and foreign markets, should devote the paramount attention towards formation of the information about cash flows, its alteration and impact upon the company’s financial condition. It was revealed in the course of the investigation that there is no detailed and universal system of formation and evaluation of the information about cash flows. The company managers do not receive the necessary information about cash flows, enabling them to take the decisions on the company management
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