NET CASH FROM THE BUSINESS ACTIVITY – THE INSTRUMENT FOR MEASURING THE QUALITY OF BUSINESS GAIN
Journal Title: Acta Economica - Year 2009, Vol 7, Issue 10
Abstract
Introducing of the fair value have led to acknowledging and presentation in the income statement of the gains that were not market-verified, which have resulted in increased difference between the amount of the business gain and the net cash from the business activity. Not only these gains were not accompanied by the cash inflows in reporting period, but it is not even certain if and in what amount the future cash inflow would be generated on that basis. This makes more complex the interpretation relative between these two indicators of the company’s success. The need to provide, by using these two measures, a more reliable assessment of the movements of result and net cash from the future business activity and to create an opportunity for identifying of results, at identification of which were used a measures of “creative accounting” have led to establishing of concept of indicator referred to as “extra cash margin”, i.e. ECM. This indicator is considered as very useful instrument for measuring of relative growth of rates of business gain and net cash from the business activity. Based upon the changes of the ECM’s level in longer term, it is possible not only to evaluate the financial position of the company, but also to give a highly reliable prognosis of movement of the business gain and net cash from the business activity in future.
Authors and Affiliations
Ката Шкарић Јовановић, PhD
Keywords
Related Articles
- EP ID EP43652
- DOI -
- Views 286
- Downloads 0
The Model of Enterpreneurial Bank
The economy of Republic of Srpska, in other word, of Bosnia and Herzegovina, is one of the most undeveloped in this part of Europe. Economic system has a lot of weaknesses: economic, legislative and social characters. In...
THE FEEDBACK OF COMMUNICATION
Making the feedback of communication is a phase of communicational process, which has special role and importance in communication between managers and workers. Therefore, because the feedback of communication, like fina...
UNIVЕRSITY STUDENTS’ ЕNTRЕPRЕNЕURIAL INTENTIONS: INSIGHTS FROM BIH (REPUBLIC OF SRPSKA)
This paper analytically presents the factors of entrepreneurial intentions of students in Bosnia and Herzegovina (BiH). The research problem can be defined by the question whether today a university can be called an “ent...
The importance and role of destination marketing in attracting foreign direct investments
The authors have identified the scope and purpose of this paper by the formulation of the title. The paper points to interdependence between the development and use of destination marketing, on the one hand, and investme...
Opportunity for Sales Promotion Using the RFID Technology
Radio Frequency Identifcation (RFID) is a revolution in industrial control, because it has the potential to simplify and make more robust tracking of parts or part carriers through manufacture, storage, distribution, and...