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

Let us assume that the company presents the following planned statement, determined based on a comparison between actual data and prospective values summarised in the budget above.: Needs sources CASH FLOW OF CHARACTERISTIC BUSINESS MANAGEMENT (OR CASH FLOW IN STRICT SENSE 502 LONG TERM TANGIBLE AND INTANGIBLE ASSET MANAGEMENT *purchase of plant *purchase of buildings 5600 3000 FINANCIAL MANAGEMENT * obtaining bank loan * obtaining new loan * annualloanrepayment *repayment of short-termdebt *payment of financialcharges 300* 3000* 1728* 9659 12.085 ASSET MANAGEMENT * purchase of securities * purchase of participations *receipt of interestincome * collection of dividends 12000 1000 200* 100* MANAGEMENT OF NON-TAX EXPENSE PROVISIONS AND RISK PROVISIONS * TAX MANAGEMENT * tax payment 700* NON- CHARACTERISTIC MANAGEMENT BY DEFINITION SEVERANCE PAY MANAGEMENT * payment of severancepay 50* EQUITY MANAGEMENT AND DIVIDENDS * share capital increase * dividenddistribution 500* 6336 ∆ CASH AND ACTIVE BANK TOTAL 28380 28380 An asterisk has been affixed to recurring needs and sources to facilitate the interpretation of the data. An analysis of the statement shows that: 1. The characteristic monetary cash flow, which should represent the recurring source par excellence, causes, on the contrary, a need; 2. Total recurring requirements are 6,278 (not including requirements from typical operations) against frequent sources, amounting to 300. As can be seen, the company does not produce a positive cash flow. The flow produced by the typical management, instead of bringing liquidity to the company, drains cash flow abundantly. It is clear how, in the presence of a negative cash flow, the recurring sources are considerably, less than the non-occurring needs. This circumstance points to a significant dynamic financial imbalance. Pivotal to the assessment of creditworthiness is the analysis of the company's ability to pay its debts regularly. The lack of characteristic incoming cash flow and the significant excess of recurring requirements over the amount of sources of a similar nature identify two pieces of information that should cast doubt on the existence of an absolute financial equilibrium. Any judgement pronounced without carrying out an accurate analysis of the cash flow statement can, therefore, potentially lead to erroneous assessments of companies' 'real' creditworthiness since what the flows show cannot be extrapolated from any other information tool. Analyses developed only through ratios, or other static aggregates are harbingers of possible significant problems. In this case, too, as is the case with the static analysis of financial reporting published at the company registry office, the greatest interpretative obstacle is the impossibility of assessing the degree of reliability of the valuations made in the absence of precise information on the company's financial dynamics VIII. C onclusions From what has been said above, it is clear that it must verify the assessment of a company's creditworthiness through an in-depth analysis of the entire financial report for the year and any statements 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 101