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Financial Reporting - Profitability and liquidity: income statements and statements of cash flows财务报告 - 盈利能力和流动性：损益表和现金流量表
Introduction介绍
“现金是任何企业的生命线，没有它，生存就不太可能”（ULMS，2016）。我同意这种观点，因为在市场经济中，企业现金流在很大程度上决定了企业的生存和发展能力。即使是企业，如果他们的现金流不顺利和有效安排，也会对他们的正常生产经营产生负面影响，更重要的是，它很可能导致企业财务危机，导致破产清算威胁到企业的生存（威尔逊）和风景，2010）。缺乏现金流将导致偿债能力的削弱，这将直接影响企业的信誉，最终影响企业的生存。企业规模的扩大，创新和发展需要大量资金，缺乏资金对企业的发展和规划产生很大影响，影响企业未来的生存（Bendrey，Hussey和West，1996）。
“Cash is the lifeblood of any business, and without it, survival is very unlikely” (ULMS, 2016). I agree with this view, because in a market economy, corporate cash flows to a large extent determine the survival and development capabilities of an enterprise. Even enterprises have, if their cash flows are not smooth and scheduled effectively, it will negatively affect their normal production and operation, more importantly, it is likely to lead to corporate financial crisis, resulting in bankruptcy liquidation to threaten the survival of enterprises (Wilson and Scenic, 2010). The lack of cash flows will cause the weakening of solvency, which will directly affect the credibility of enterprises, and ultimately affecting the survival of enterprises. Expansion, innovation and development of scale of enterprises require a lot of money, lack of funds cause great impact on the development and planning of enterprises to affect the future survival of enterprises (Bendrey, Hussey and West, 1996).
Importance of statement of cash flow 现金流量表的重要性
现金流量表是财务报表的三个基本报告之一，它显示了固定期间（通常是每月或每季度）机构现金的变化。现金流量表的重要性体现在以下几个方面。首先，现金流量表提供了一定时期内现金流入和流出的动态财务信息，显示了在报告期内从经营活动，投资和融资活动中获得了多少现金，如何使用企业获得的现金，它可以解释资产，负债，净资产变化的原因，以发挥解释资产负债表和损益表的补充作用（Wilson and Scenic，2010）。其次，通过现金流量表，我们可以了解企业现金流入的构成，分析企业支付债务的能力和股息，以增强投资者对投资的信心和债权人恢复其权利的信心（Bendrey，Hussey和West， 1996年）。第三，现金流量表反映了企业在一定时期内现金流入和流出的总体情况，解释了如何获得现金以及如何使用现金。通过现金流量和其他财务信息的陈述，我们可以分析企业未来获得或支付现金的能力（Schmidt，2016）。第四，制定现金流量表有助于与国际惯例协调一致。世界上许多国家都要求公司准备现金流量表，如美国，英国，澳大利亚，加拿大等，因为它在开展跨国经营，筹集海外资金和加强国际经济合作方面发挥了积极作用（Choi） ，Han，Jung和Kang，2015）。
A statement of cash flows is one of the three basic reports of financial statements, it shows changes in the cash of an institution during a fixed period (usually monthly or quarterly). Importance of statement of cash flow is reflected in the following aspects. Firstly, a statement of cash flows provides dynamic financial information on cash inflows and outflows for a given period, showing how much cash are obtained from operating activities, investments and financing activities during the reporting period, how the cash gained by the enterprise is used, it can explain the reasons for changes in assets, liabilities, net assets to play a supplementary role of explaining balance sheet and income statement (Wilson and Scenic, 2010). Secondly, through a statement of cash flows, we can understand the composition of corporate cash inflows, analyzing corporate ability to pay for debt and dividends to enhance investors’ confidence in investment and creditors’ confidence to recover their rights (Bendrey, Hussey and West, 1996). Thirdly, a statement of cash flows reflects the overall situation of cash inflows and outflows of an enterprise within a certain period, explaining how the cash is gained and how it will be used. Through a statement of cash flows and other financial information, we can analyze the ability of enterprises to obtain or pay cash in the future (Schmidt, 2016). Fourthly, development of a statement of cash flows facilitates harmonization with international practice. Many countries in the world require companies to prepare cash flow statements, such as the United States, Britain, Australia, Canada and so on, as it plays a positive role in carrying out transnational operations, raising funds abroad and strengthening international economic cooperation (Choi, Han, Jung and Kang, 2015).
Controversy surrounding published statements of cash flows
The significance of statements of cash flows is beyond doubt, but there are also the following disputes on statements of cash flows. First, for various purposes, management of enterprises take financial measures to modify the data of statements of cash flows, resulting in investors’ misunderstanding the status enterprises (Laura, Dumitru and Razvan, 2011). For example, the existing rules on the classification of statements of cash flow leave some room for judgment and choice, so that the issue of "accounting option" appears in statements of cash flows. For the purpose of beautify cash flows of a company, they include a cash flow of investment and funding activities into the cash flows for operating activities, and some cash for operating activities is taken to be used in investment activities, funding activities, leading to investors’ miscarriage in understanding the status quo of the enterprise. Second, statements of cash flow only record the current cash receipts and disbursements, regardless of whether the cash flow is attributable to current profits and losses. Therefore, the current business performance and the "operating cash flow net" is not necessarily linked, therefore, statements of cash flow can not always correctly reflect the current operating results (Atrill and McLaney, 2014).
Statements of cash flows in China
China also issued "Enterprise Accounting Standards – Statements of Cash Flows" in 1998. The develop guidelines of China's statements of cash flows are basically consistent with the provisions in the United States and that of IASC, the development of China's statements of cash flows basically refer to their guidelines, because the accounting rules developed by the United States and IASC represent the most advanced accounting rules today, in the meantime, the accounting rules developed by the United States and IASC are most in line with China's current market economy. (Wan and Zhu, 2011). The UK's model of statements of cash flows is very different from China's standards, which is reflected in the preparation of statements of cash flows and the classification of statements of cash flows, of course, this is also very worthy of learning by Chinese enterprises. The application of Chinese enterprises’ statements of cash flows has played a very positive role in their cross-border operation, overseas financing and strengthening of international economic cooperation (Wan and Zhu, 2011).
Conclusion
Cash has an important significance for business development of a modern enterprise. Statements of cash flows play a particularly important role for business managers to develop management and development measures, it is also important for investors to understand the business situation of an enterprise. However, it should be noted that there is some controversy about the practical application of statements of cash flows, the rules need to be further improved. Statements of cash flows in China have also been widely used, which provides a powerful help for Chinese enterprises to participate in international competition.
References
Atrill, P. and McLaney, E., (2014), ‘Finance and accounting for managers.’ Laureate Online Education custom Ed. Harlow, UK: Pearson Custom Publishing.
Bendrey, M. & Hussey, R. & West, C. (1996) ´Accounting and Finance in Business´,4th Edition. London: Cengage Learning EMEA.
Choi W, Han S., Jung S.H. and Kang T. (2015) “CEO’s Operating Ability and the Association between Accruals and Future Cash Flows” Journal of Business Finance & Accounting Vol. 42(5) & (6), 619–634.
Laura, N. Dumitru, M. & Razvan, M., (2011), 'CASH FLOW REPORTING AND CREATIVE ACCOUNTING,' Annals Of The University Of Oradea, Economic Science Series, 20, 2, pp. 597-602, Business Source Complete, EBSCOhost [Accessed 12 November 2016]
Schmidt, M. (N.D.) `Cash Flow Statement: Reviewing The Cash Flow from Operations´ [Online]
Wan, H. & Zhu, K. (2011) ´Is Investment–cashflow Densitivity a Good Measure of Financial Constraints?´China Journal of Accounting Research, 4(4), 253-270.
Wilson, P. & Scenic, C. (2010) ´Navigating Accounting´.
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