THEORETICAL APPROACHES TO UNDERSTANDING THE NATURE OF THE CASH FLOWS OF COMPANIES

Galyna Drebit, Zoran Cekerevac
2017 MEST Journal  
The article deals with theoretical approaches to understanding the nature of the cash flows of companies. The question of determining the economic nature of the cash flows is extremely important both in theoretical and practical aspects, as formed approaches to the interpretation of the essence of the cash flows in the future define the fundamentals of their planning and control. The article is presented in three parts. The first part deals with the static approach to understanding the nature
more » ... the cash flows of the company in which the cash flow is interpreted from the perspective of its impact on the balance of funds in the accounts of the company and is defined as the net movement of cash for the period. The basic categories that characterize the cash flow within the static approach are: "cash balance at any given time", "net movement of cash" and "net cash flow". The second part of the article deals with the nature of the cash flows on a dynamic level. At this level, the cash flow represents the movement of cash in two ways: in the form of a plan of future cash flows of the company in time or report about their movement in prior periods. Confidence approach to the determination of the cash flows is presented in the third part of the work. The author believes this approach is the most reasonable. Using it the author in the conclusions offers to determine the cash flow as the directed movement of cash that is expressed in its receipt, distribution, and disposal from operating, investing and financing activities. The result of the movement of cash is a balance of cash and cash equivalents, which serves as a static determinant of the cash flows.
doi:10.12709/mest.05.05.01.03 fatcat:umbnkcd72jcanpqu6gascpdpne