Global Journal of Management and Business Research, A: Administration and Management, Volume 22 Issue 8

produced by typical operations, some attribute to this aggregate a broader financial sense that, often, converges toward a conception of flow that, although produced by characteristic activity, is expressed in terms of net working capital. Those who interpret cash flow in a broader sense tend to make, however, a second technical step to highlight, in addition to the aggregate thus determined, the cash flow coming from the performance of the company's typical activity. By way of example, consider the following example: Characteristic short-term assets and liabilities: 31/12/N 31/12/N+1 31/12/N 31/12/N+1 Customers 100 400 Suppliers 100 200 Inventories 50 100 Total characteristic short-term assets 150 500 Total short-term liabilities characteristic 100 200 Profit and loss es. N Characteristic costs includingpurchase of rawmaterials, wages, contributions, purchase of services, consulting, commissions, miscellaneousoperating costs 1100 Characteristic revenues including sales and service revenues 2800 Inventories 1/1 50 Inventories 31/12 100 Depreciation and amortiztion** 400 Financial chargers 200 Severancepay and provision for risck and charges** 300 Totatalexpensens 2050 Net profit 850 Total 2900 Total 2900 *Characteristic operating expenses and revenues may be paid/collected in year n+1, or they may be, in part, paid/contained in year n+1, and the amount be subject to deferred payment/collection. To understand, with reference, for example, to sales revenue, how much has been collected and how much has been deferred to customers, it is sufficient to look at the difference between customers at 12/31/n and customers at 12/31/n+1. In our example, customers increased by 300, which means that, for 300, it did not collect the revenue recognized in profit and loss. The total revenues then (2,800) can be conceptually divided into revenues collected for 2,500 and revenues subject to a deferral for 300(i.e., revenues that only generated a credit but no cash receipts). This concept also applies, of course, to suppliers. Using the same reasoning, we can say that characteristic costs for the purchase of raw materials, wages, contributions, purchase of services, consulting, commissions, and miscellaneous operating expenses were paid in cash in the amount of 1,000 while in the amount of 100 they were subject to deferred payment (i.e., a debt arose but no impact on money) ** non-cash costs identify costs arising from year-end valuations. These costs are charged on an accrual basis and have no impact on cash, the bank. They are just "scriptural" accounting items with no financial impact whatsoever (neither in the broad sense self in terms of liquidity). Poiché il capitale circolante netto caratteristico identifica la variazione derivante dalla sommatoria algebrica dell’attivo e passivo a breve caratteristico, in base ai dati sopra esposti, il CNWC ammonta a: 31/12/N 31/12/N+1 Customers 100 400 Inventories 50 100 (suppliersi) -100 -200 characteristic net working capital ( CNWC) 50 300 As can be seen, the CNWC increased by 250. It will explain the significance of this change in the following pages. In operational terms, the financial characteristic cash flow broadly understood, that is, interpreted as the algebraic sum of typical expenses and revenues that impacted net working capital, amounts to: Financial Reporting Destined to External Third Parties as a Tool for Analyzing Credit Worthiness: Usefulness and Limitations. The Italian Case Global Journal of Management and Business Research Volume XXII Issue VIII Version I Year 2022 ( ) A © 2022 Global Journals 96