Profit, Cash Flows and Artificial Intelligence: Challenges in Making Financial Decisions
DOI:
https://doi.org/10.46793/Rev25112.069MKeywords:
profit, cash flow, evaluation, artificial intelligence, financial decision-makingAbstract
Unlike accounting profit (income), which is subject to different estimates and accounting policies, cash flow provides a more realistic insight into a company’s ability to generate liquid assets, settle liabilities and finance growth. Cash flow represents one of the most reliable indicators of financial stability and operational success of organizations, which is why it is increasingly used as a reference point (benchmark) in assessing business performance. This paper aims to examine the role of profit and cash flow in evaluating financial performance and making managerial decisions. In addition, the impact of artificial intelligence is also examined. The results indicate that the use of cash flow as a reference criterion contributes to a more objective assessment of performance and the improvement of financial management, especially in conditions of increased uncertainty and limited access to external sources of financing, as well as the different impacts of artificial intelligence on operational performance.
References
Agarwall, H., Das, C. P., & Swain, R. K. (2022). Does artificial intelligence influence the operational performance of companies? a study. In the 2nd International Conference on Sustainability and Equity (ICSE-2021), pp. 59-69, Atlantis Press.
Albuquerque, F., Velez, A. R., & Pinto, V. (2023). What is more relevant? A comparison of cash flows indicators versus profit or loss from listed European companies. Cogent Business & Management, 10(3), 2251214.
Barker, R. (2010). On the Definitions of Income, Expenses and Profit in IFRS. Accounting in Europe, 7(2), 147–158. doi:10.1080/17449480.2010.511892
Bowen, R. M., Burgastahler, D., & Daley, L. (1987). The incremental information content of accrual versus cash flow. The Accounting Review, 62(4), 723–747. https://www.jstor.org/stable/247781
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of accounting and economics, 18(1), 3-42.
Drebit, G. (2017). Theoretical approaches to understanding the nature of the cash flows of companies. MEST Journal, 5(1), 22-31.
Geile, A. L. (2007). Cash flow management and the cost of debt. The University of Arizona.
Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting horizons, 13(4), 365-383.
Huang, C. K., & Lin, J. S. (2025). Firm Performance on Artificial Intelligence Implementation. Managerial and Decision Economics, 46(3), 1856-1870.
Knežević, S., Fabris, M. (2010). Upravljanje obrtnim sredstvima i kratkoročnim obavezama, Računovodstvo, 11-12, 61-72.
Knežević, S., Mitrović, A., & Ilić, Z. (2016). Pogled na izveštavanje o tokovima gotovine iz razliĉitih perspektiva. Menadžment u hotelijerstvu i turizmu, 4(2), 36-47.
Knight, F. (2025). Risk, uncertainty and profit. Bonhopai Books.
Lakshmi, V., & Bahli, B. (2020). Understanding the robotization landscape transformation: A centering resonance analysis. Journal of Innovation & Knowledge, 5(1), 59-67.
Littleton, A. C. (1928). What is profit?. Accounting Review, 3(3), 278-288.
Lyon, S., Timothy, K., & Loren, M. (2021). Does the importance of relevance and faithful representation differ between GAAP and tax reporting? A discussion of the trade-offs between cash-basis, accrual-basis, and fair value accounting methods. Journal of Accounting and Taxation, 13(3), 144–152. https://doi.org/10.5897/JAT2021.0458
Ma, L., & Sun, B. (2020). Machine learning and AI in marketing–Connecting computing power to human insights. International Journal of Research in Marketing, 37(3), 481–504.
Mitrović, A., Knežević, S. (2025). Računovodstvo, Fakultet za hotelijerstvo i turizam u Vrnjačkoj Banji, Univerzitet u Kragujevcu
Okvir za pripremanje i prikazivanje finansijskih izveštaja, “Sl. glasnik RS”, br. 133/2003 – rešenje.
Passos, L. C., & Cavalcante, P. R. N. (2021). The predictive ability of earnings and political uncertainty: Evidence from Latin American countries. Journal of Education and Research in Accounting, 15(3), 293–309. https://doi.org/10.17524/repec.v15i3.2868
Roberts, B. (1988). What Is Profit? Rethinking Marxism, 1(1), 136–151. https://doi.org/10.1080/08935698808657792
Stevenson, H., & Nelson, J. (1967). Profits in the Modern Economy: selected papers from a conference on understanding profits. Minneapolis: University of Minnesota Press. https://muse.jhu.edu/book/32849.
Tairov, I., Stefanova, N., Aleksandrova, A., & Aleksandrov, M. (2024). Review of AI-driven solutions in business value and operational efficiency. Economics Ecology Socium, 8(3), 55-66.
Tania, B., Fedyk, A., He, A., Hodson, J. (2025). Artificial Intelligence Makes Firm Operating Performance Less Volatile. AEA Papers and Proceedings, 115, 35–39, DOI: 10.1257/pandp.20251002
