Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 5

precisely the opposite of borrowing, which is a financing activity A further limitation of the structures or lists of items suggested by the international, American and Italian national accounting standards concerns the circumstance that, based on these accounting items, it is difficult, or rather in most cases impossible, to determine the monetary cash flow resulting from the performance of characteristic activities. Monetary cash flow from core business activities is understood as the flow of sources net of the requirements associated with all so-called monetary revenues net of the so-called monetary costs associated with typical or core business operations. When reference is made to monetary costs and revenues, it is not intended to refer to the values entered in the profit and loss statement as operating costs and revenues calculated according to economic competence appear in that document. So-called monetary costs and revenues are not academic scientific terms, often used to make the reader understand which values to include in the so-called characteristic cash flow. It is evident that the latter matter, representing a cash flow value, must be composed of monetary sources and needs. Referring to the characteristic activity, it is equally logical how only values connected with the performance of the typical business activity can appear in this aggregate. In light of these considerations, it can be understood how the characteristic monetary cash flow derives from the sum of the needs and sources connected with costs and revenues, which derive from the performance of the typical activity. Therefore, it will not include non- monetary costs such as depreciation, amortisation, provisions for risks and charges and opening and closing inventories in the characteristic monetary cash flow, and all costs and revenues that can be defined as characteristic must be transformed into monetary cash flows, i.e. they must be reduced by the differences in payables and receivables that can be identified in the balance sheet and determined by comparing the value of these payables and receivables at 1/1 and 31/12 of the year or period in question. Realising the items included in the national or international and American accounting standards illustrated above, it is noticeable how often generic items appear, such as income from other revenues and expenses from additional costs. It is evident how on the basis of these definitions, it is impossible to understand what is characteristic and what is not connected to the performance of the typical business activity. In the proposed items of the accounting standards illustrated in the previous paragraph, there is also the expense for employee costs. It is evident that if written this way, the output includes wages, contributions and severance pay. This mixture of values prevents the determination of the characteristic cash flow as this value includes wages and contributions but certainly cannot include the payment of a severance payment liability paid to an employee who has terminated his employment with the company. Suppose attention was to be focused on the indirect method of calculating cash flows related to operating activities. In that case, it is possible to assume that what, for example, is defined in the Italian principle IAO (Italian Accounting Organism (OAO, in italian language OIC)) as cash flow after changes in net working capital, could be considered, in essence, as the cash flow from core business. This, however, cannot be taken for granted since the items indicated in the scheme prepared by the Italian Accounting Organism (Henceforth IAO, in italian language OIC) are absent all payables and receivables that are not directly connected to the purchase of raw materials but are connected to costs included in the performance of characteristic activities. In addition, nothing is said about internal constructions, which can even change the amount of the characteristic monetary cash flow. For these reasons, it is considered that the accounting principles illustrated in the preceding paragraph also present, among the limits that can identify in these statements/listings of items, the limitation of the substantial impossibility of calculating the characteristic monetary cash flow, which instead, in a dynamic financial analysis represents an essential element. In this regard, it should note that the interpretation of the flows presented in a cash flow statement must always be derived from a comparison between recurring requirements and recurring sources and subsequently from non-recurring and non-recurring sources. The only exception to this rule of comparing several values (regular needs with frequent sources and non-recurring needs with non-recurring sources) concerns the characteristic cash flow. This is the only value that can be interpreted without making any other comparison. This happens when this item is negative. If the typical monetary cash flow is negative, the characteristic activity, instead of bringing monetary flows to the company, is hydrazine. And already this consideration causes the list to express a negative judgement on the dynamic financial performance of the company may fall that against a negative cash flow, there are some recurring sources such as rents receivable that cover this need resulting from the negative cash flow. In this case, however, the circumstance that the regular sources cover the recurring needs is not sufficient to express a favourable judgement on the dynamic financial equilibrium because the presence of a negative cash flow characteristic is a negative element of the company's operating performance. The circumstance that there is an activity of a capital nature, and therefore, by definition, not characteristic, that covers the drainage of monetary funds implemented by the same characteristic action does not entail a favourable judgement on the dynamic financial equilibrium. Therefore, determining the cash flow is reasonable and 26 Global Journal of Management and Business Research Volume XXII Issue V Version I Year 2022 ( ) C © 2022 Global Journals Does the Formal Structure of the Cash Flow Statement have an Impact on the Understanding of the Data Contained in the Report Explaining the Company's Financial Dynamics?