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Estimating the Cash Flows to the Economic Entities in Romania

Author

Listed:
  • Răscolean Ilie

    (University of PetroÅŸani)

  • Rakos Ileana-Sorina

    (University of PetroÅŸani)

Abstract

This article tries to demonstrate that the most important stage in drafting a draft budget for aninvestment is the estimation of cash flows. If the cash flow estimate does not have a reasonabledegree of accuracy, any analytical technique, irrespective of its complexity, can lead to mistakendecisions and hence to operating losses and market price cuts. This does not mean that economicentities are not allowed to make estimation errors, but only that the estimation of cash flows mustbe the best possible when evaluating a project. Therefore, describing the importance of accuratelyestimating cash flows is rather difficult, but observing some basic principles will help minimizeforecast errors. The article ends with the author’s conclusions on estimating cash flows for aninvestment budget.

Suggested Citation

  • Răscolean Ilie & Rakos Ileana-Sorina, 2018. "Estimating the Cash Flows to the Economic Entities in Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 493-498, July.
    • Handle: RePEc:ovi:oviste:v:xviii:y:2018:i:1:p:493-498
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    More about this item

    Keywords

    analysis; budget; estimation; cash flow; project;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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