The relationship of profit, cash flow and working capital of enterprises

Abstract

On the basis of theoretical studies such basic concepts as «monetary flow», «flow of funds» and «cash-flow» are  identified. These indicators can act as the main targets and the criterion of success of the enterprise.  It is proved that these concepts are not identical but are closely linked.  The relationship between cash flow and the company's cash resources is shown schematically.  It is determined that the monetary flow are the interval indicators; fundsaremoment indicators.  The funds are part of the working capital of the enterprise.  Flow of funds affects the change in working capital.  It is noted that with the adoption of national accounting and reporting standards the «Flow statement» has been changed.  But it still remains the main source for users of financial statements to reflect the full, true and unbiased information about the changes that occurred in cash and cash equivalents of the enterprise for the period.  The main reasons for the profit and cash flow are not the same.  The theoretical methods of investigation are used in this research. The industrial enterprises have become the sphere of  the results application. They are confirmed by the calculations presented in the article.