The relation between fiscal policy and firm cash flows

Fiscal policy tries to achieve its objectives by modifying the programmes of public revenues and public expenses elaborated by the policy maker. One of its objectives is to improve the situation of the economic agents, and one way to achieve it is increasing the activity of the firms, employment and consumption. The main goal of the paper is to analyse the effects active fiscal policy would have on one of the main indicators of firms' activities: the cash flow. This indicator is being used more frequently for the users of financial information to take investment decisions. In this paper we will try to consider the different effects of fiscal policy on cash flow, because the cash flow states that are imposed as obligatory in the European Union for the objectivity of their information reflects the direct and indirect effects of fiscal policy.