accounting and management, implemented under current conditions, is quite complex to analyze, since the indicators are obtained on the basis thereof, are inherently abstract values that are not related to the actual cash flows.However, the investor, primarily interested in direct cash flow.This is due to the fact that the availability of money at the moment for him is more important than having them in the long run.Outside the profits does not reflect this fact.
thus necessary to analyze in more detail the concept of cash flow and the related concept of the time value of money.Cash flows - is receipt on the account of funds and their expenditure, regardless of the manner in which they were produced or spent.In fact, in the modern management are three main areas that affect the cash flow.
first direction - is the cash flow from operating activities.In this case, the money comes to the accounts of the company as a result of sales of goods and services.The cost of money is going to buy raw materials, salaries, office rent payment, etc.Ideally, this kind of cash flow should be close to the company's profit, but sales on credit, and deferral of payments to suppliers are the reasons for significant differences in these figures.
In addition, investment income and expenses can significantly affect the cash flows.This is the second area, which is studied in classical analysis.The investment company is none other than the exchange of one asset for another, which may in the long term to bring the company's profits.Such operations include, for example, the purchase of equipment for the production of goods or the purchase of shares of other companies.As the cash inflows are the funds received from the sale of investment assets or dividends received from them.
third direction - a financial transactions.Cash flow, in this case formed by the loans taken by enterprises and outflows, respectively, out of the funds spent on the return of these loans as well as interest payments.Financial operations are a major source of cash flow, especially in the early stages of business development.
calculating the inflow and outflow of funds, which is formed as a result of the economic operations of the company in these areas, we should not forget about the time value of money.Cash flow analysis should take into account, in which one time will receive funds.The logic of this statement is simple.An investor can invest free, available in his arms, money in any project, including the Bank.The more time pass since the investments, the greater the amount of money that the investor will get to the result of investments exceeded the potential investments in other projects.
Thus, the cash - this is a classic investment management, cash recalculated taking into account current interest rates.The later will be received by the money, the less their real value at the moment.This explains the fact that some companies are showing good earnings, are disadvantageous for investors and could be no funding.Therefore, you should focus attention in the planning of profit alone, and look at the situation through the eyes of an investor who expects to receive not only more money, but also get them as soon as possible.
