IDEAS home Printed from
   My bibliography  Save this article

The Contribution Of Cash Flow Indicators In Terms Of Information To The Company Performance Analysis


  • Assoc. Prof. Victoria Firescu Ph. D, Prof. Jenica Popescu Ph. D

    (University of Piteşti Faculty of Economic Sciences Piteşti, Romania)


The necessity of cash flow appears in the context of the limits of the balance sheet and of the profit and loss account in the reflection of the financial and accounting information. Although the profit and loss account provides a dynamical image of the activity of a company, it does no allow for obtaining an image of the financial cash flows that change the financial structure of the company or that change the company’s cash. The information related to the cash flows of an entity is useful for the users of the financial statements in the economic decision-making process, because it is a basis for the assessment of the entity’s capacity to generate cash and cash equivalents, as well as the usefulness of such cash flows. The company performance analysis based only on indicators calculated with the help of the profit and loss account is often relative and, therefore, it results in the need to determine the entity’s capacity to generate cash or cash equivalents. Intermediate management balances are mere intellectual formalizations of potential gains that, in the context of the accrual accounting, create a hypothetical dimension of the company performance. Free cash flows should not be interpreted in a simplistic manner based on their negative or positive value.

Suggested Citation

  • Assoc. Prof. Victoria Firescu Ph. D, Prof. Jenica Popescu Ph. D, 2011. "The Contribution Of Cash Flow Indicators In Terms Of Information To The Company Performance Analysis," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 4(39), pages 166-173, May.
  • Handle: RePEc:aio:aucsse:v:1:y:2011:i:8:p:166-173

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    cash flow; cash indicators; performance;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aio:aucsse:v:1:y:2011:i:8:p:166-173. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anca Bandoi). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.