THE ACCOUNTING RESULT BETWEEN THE RETURN INFORMATION AND THE LIQUIDITI INFORMATION OF THE ENTITY
The financial position of an entity is influenced by the economic resources it controls, its financial structure, its liquidity and solvency, as well as its ability to adapt to the changes in its operating environment.
The information about the economic resources controlled by the entity and its capacity in the past to change these resources is useful to predict the entity’s ability to generate cash or cash equivalents in the future. The information about the financial structure is useful for anticipating the future lending needs and of the way in which the profits and the future cash flows will be distributed among those who have an interest in the entity; these are also useful for anticipating the entity’s chances to receive funding in the future. Therefore, the information about liquidity and solvency is useful to predict the entity’s ability to honour its outstanding financial commitments and determine the entity’s results at the end of the taxable year.
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