Summary
In his article ”Research on financial strategy based on cash flow” Wang focused on the advanced Chinese economy by analyzing the effect of cash flow-based policy on the companies’ performance. Wang measures the capital level of a company, depending on the cash flow, and examines its financial strategies (2021). Since many companies are in a cash-strapped environment with high sales rates, a change in financial strategy is needed to avoid cash gaps. Information about financial flows allows the management to measure the state of affairs connected with the company’s cash and analyze the problems in this area, controlling the organization’s performance (Wang, 2021). Wang suggests a negative correlation exists between company capital status and net cash flow from operating activities (2021). Companies need more control over their cash flow when setting up financial strategies. Sustainable business development is impossible without adjusting the financial plan to avoid a shortage of funds.
Reflection
In my opinion, the researcher comes to the correct general conclusions: financial strategy is essential for analyzing the effectiveness of an enterprise; the company’s financial statements are not always accurate. The financial component of the enterprise’s activity becomes vital for analyzing the strategy, starting to reach the same level as sales figures and other critical business characteristics (Ferry & Ricci, 2021). Determining the net cash flow from operating activities is one of the main ways to analyze the company’s problems and prospects, which seems absolutely correct.
It seems to me accurate that businesses are trying to explore not only the traditional indicators of success but also their financial flows. In the modern world, studying such data can give a company a competitive advantage. Therefore, I think it is imperative to consider all business performance aspects. Despite the apparent benefits, companies are unfortunately not always open in financial policy questions. Many firms are not ready for change, even though adaptability, in my opinion, is one of the most critical indicators of success in today’s market. It seems to me that for a compelling business organization, financial flows should become not just a digital indicator but part of the company’s culture, openness in this regard will increase the reputation and trust of customers.
References
Ferri, S., & Ricci, F. (2021). Financial Strategies for Distressed Companies: A Critical Analysis and Operational Tools. Germany: Springer International Publishing.
Wang, H. (2021). Research on financial strategy based on cash flow. In 6th Annual International Conference on Social Science and Contemporary Humanity Development (SSCHD 2020) (pp. 800-805). Atlantis Press.