TY - JOUR AU - Ivanova, Rositsa PY - 2020/10/08 Y2 - 2024/03/28 TI - ENTITY’S CASH FLOWS UNDER THE CONDITIONS OF CRISIS (METHODOLOGY AND METHODS FOR ANALYSIS) JF - KNOWLEDGE - International Journal JA - kij VL - 42 IS - 1 SE - Articles DO - UR - https://ikm.mk/ojs/index.php/kij/article/view/526 SP - 147 - 153 AB - <p>The movement and availability of cash flows in the process of the entity’s activity are crucial for its normal and trouble-free course. The methodological and methodical guidelines for cash flow analysis are relevant at all phases and stages of the development of an entity. These matters are especially relevant under the conditions of crisis. In the current pandemic situation due to the COVID 19 crisis, the matter of the availability of cash flows and their movement (cash inflows and outflows) is also important with view of the entities’ ability to continue as “going concern”.<br>The net cash flow is equal to the difference between the cash inflows and outflows from all entity’s activities. The positive net cash flow is a necessary but not a sufficient condition for the entity’s liquidity and solvency. With view of the entity’s position and future development, one needs to analyze the movement of cash flows, as well as the net cash flows in general and by types of activities – operating, investing and financing activities, on continuous basis.<br>The net cash flows from operating activity are calculated as a difference between the cash inflows and outflows from this activity. Here we speak about trade receivables, trade payables, wages and salaries, payables to state institution for social insurance contributions and corporate income tax, as well as other cash receivables and payables received or made with regard to the entity’s operating activity. The analysis and assessment of the turnover rate, liquidity and rate of return of the net cash flows from operating activity is very important for the management of every entity. Based on the resultative analytical information, the management is able to make justified and proper managerial decisions for the development of the entity’s operating activity. This is a prerequisite for making decisions with regard to other entity’s activities as well, for example, capital structuring, financial policy, investments and investment policy in short- and long-term perspective.<br>The net cash flows from investing and financing activity are also calculated as differences between the cash inflows and outflows from these activities.<br>The object of this publication highlights the entity’s cash flows – in general and by types of activities.<br>The subject of the study covers the matters related to the methodological and methodical guidelines for analysis of the entity’s cash flows. The analysis of cash flows is made on the basis of the information contained in the Statement of cash flows according to the direct method. The indicators for analysis and assessment of cash flows are systemized.<br>The aim is to improve the methods for analysis of the entity’s cash flows by presenting different issues under the conditions of crisis.</p> ER -