Financial analysis of the fixed telephony companies through the application of liquidity index in cash flows statements

Abstract

Globalization raises competition among markets and requires increasingly effective manager’s actions. At the same time, investors seek for information to help in the evaluation of their investment. In this scenario, to contribute to the debate about the balance-sheet analysis applied to the Cash Flows Statement, this article aims to analysze the demonstration through the use of liquidity index, to verify the viability of such a diagnosis. With this aim, companies of the Fixed Telephony segment registered in the Bovespa, who produced and disseminated the CFS of the years 2005, 2006 and 2007, were selected. The adopted research methodology consisted of a case study where the rates of liquidity were calculated and analyzed based on the statements of the companies concerned. It was concluded that the analysis of CFS is able to provide valuable information about the financial health of companies, because through the use of index, it is possible to verify the causes of the variations occurring during a given period.