Controlling the Company's Internal Cash‐Flows

Abstract

The traditional profit centre concept of Management has a fatal defect. It concentrates attention on near term reported profit rather than cash flow. The two are not equivalent. Both short term and long term, they tend to move in opposite directions. Near term investment depresses near term reported profit although it may increase profit markedly later. Near term divestment frequently appears as near term profit but also often leads to liquidation of the business in the long run.

Citation

Soenen, L.A. (1979), "Controlling the Company's Internal Cash‐Flows", Management Decision, Vol. 17 No. 6, pp. 458-466. https://doi.org/10.1108/eb001206