Zaytsev A.A.Published in:
Russian Journal of Innovation Economics
– Volume 7, Number 3 (July-September 2017)

JEL classification: G31, G32, L21, M11, O16, O31

Keywords: cash flows, financial analysis, financial indicators, free cash flow, lean production


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Abstract:

Under the existing economic conditions Russian enterprises face the necessity to maintain their competitiveness using their internal reserves. Such innovative managerial concepts as the kaizen philosophy and the Lean Production concept (LPC) are particularly promising in order to achieve this goal. Both the Russian scientific and business communities was devoting much of their attention to improving production, logistic, organizational, and managerial processes as well as to implementing the LPC in the recent decades. However, the interrelations between the LPC and changes in the Free Cash Flow of an enterprise have not been sufficiently clarified. Thereupon, the paper presents decomposition of the Free Cash Flows from operating, investment, and financial activities down to the key financial parameters. The author analyzes the influence of the LPC implementation on the financial parameters. The results of the analysis can be used to design a system of Key Performance Indicators for functional subsystems involved into the process of the LPC implementation and also to develop an approach to evaluating the economic effect of the LPC implementation projects.

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