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1
Lightstone, Karen, Karrilyn Wilcox, and Louis Beaubien. "Misclassifying cash flows from operations: intentional or not?" International Journal of Accounting and Information Management 22, no. 1 (February 25, 2014): 18–32. http://dx.doi.org/10.1108/ijaim-07-2012-0039.
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Purpose – The purpose of this paper is to investigate the accuracy and informational quality of the cash from operations section of the cash flow statement. Design/methodology/approach – This paper empirically tested the accuracy of the cash from operations reported by Canadian non-financial companies. The authors studied 262 companies at three different time periods providing 786 firm observations. For each observation, the balance sheet was used to confirm the figures reported in the statement of cash flows. In addition, the authors investigated management's disclosure of the particular working capital items. Findings – The findings suggest that in recent years, companies are more likely to overstate their cash flow from operations, thereby presenting a better financial picture than is supported by the balance sheet accounts. This would suggest that the investing or financing section would be correspondingly understated. The presence of acquisitions reduces overstatements, which may be the result of more auditor presence. Research limitations/implications – This paper extends previous research from documented single, isolated instances of cash from operations being misstated to include a significant sample with more generalizable findings. The data are Canadian which may limit the generalizability to other countries. Future research should address the extent to which financial analysts rely on the reported cash from operations figure. Practical implications – This preliminary study may have implications for financial analysts and others relying on the free cash flow figure. Originality/value – This study expands on previous research which has taken place only on a case-by-case basis.
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Burke, Qing L., and Matthew M. Wieland. "Value relevance of banks' cash flows from operations." Advances in Accounting 39 (December 2017): 60–78. http://dx.doi.org/10.1016/j.adiac.2017.08.002.
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Kim, Jeong-Jae. "Changing Relationship Between Accruals and Cash Flows from Operations." Korean Data Analysis Society 19, no. 5 (October 31, 2017): 2651–62. http://dx.doi.org/10.37727/jkdas.2017.19.5.2651.
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Trent, William A. "Do Core and Non-Core Cash Flows from Operations Persist Differentially in Predicting Future Cash Flows?" CFA Digest 38, no. 4 (November 2008): 39–40. http://dx.doi.org/10.2469/dig.v38.n4.2.
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Cheng, C. S. Agnes, and Dana Hollie. "Do core and non-core cash flows from operations persist differentially in predicting future cash flows?" Review of Quantitative Finance and Accounting 31, no. 1 (October 2, 2007): 29–53. http://dx.doi.org/10.1007/s11156-007-0062-7.
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Farshadfar, Shadi, and Reza Monem. "Discretionary accruals and the predictive ability of earnings in the forecast of future cash flows: Evidence from Australia." Corporate Ownership and Control 9, no. 1 (2011): 597–608. http://dx.doi.org/10.22495/cocv9i1c6art3.
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We examine whether discretionary and non-discretionary accruals improve the predictive ability of earnings for forecasting future cash flows in an Australian context. Using both within-sample and out-of-sample forecasting tests; we demonstrate that discretionary accruals improve the predictive ability of earnings in the forecast of future cash flows. Further, discretionary and non-discretionary accruals and direct method cash flow components together are more useful than (i) aggregate earnings, (ii) aggregate cash flow from operations and total accruals, and (iii) aggregate cash flow from operations, discretionary accruals and nondiscretionary accruals.
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Mulenga, Mwila Joseph. "The Relative Ability of Earnings and Cash Flow from Operations in Predicting Future Cash Flows: Evidence from India." International Journal of Accounting and Financial Reporting 5, no. 2 (October 23, 2015): 178. http://dx.doi.org/10.5296/ijafr.v5i2.8468.
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The current study examines ability of earnings and cash flow from operations in predicting future cash flow from operations of Indian companies listed in Bombay stock exchange from 2002 to 2014. The study used cash flow from operations directly reported in the cash flow statement. For the purpose of estimating regression models, Ordinary least square approach used and in measuring the predictive power of each models in forecasting future cash flow adjusted R-squared used as forecasting measure. The findings of this study reported cash flow from operations to have more power in than earnings in predicting future cash flow, which do not support the assertion given out by Financial Accounting Standards Board. The findings of this study provide additional insights to Indian capital market researchers and also benefit users of accounting information in India by providing them with empirical evidence on the beneficial ability of cash flow data in predicting future cash flow and that would assist them in making their investment decisions, lending and other decisions and also knowing the financial status of company they wish to invest.
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Hales, Jeffrey, and Steven F. Orpurt. "A Review of Academic Research on the Reporting of Cash Flows from Operations." Accounting Horizons 27, no. 3 (April 1, 2013): 539–78. http://dx.doi.org/10.2308/acch-50498.
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SYNOPSIS:We provide a comprehensive review of academic research related to direct method cash flow presentation. While many financial statement users have stated a preference for the direct method, few accounting standard setters around the world have required it and, given a choice, most entities present operating cash flows using the indirect method. Our review indicates that academic research has generally found direct method cash flow information to be decision useful. Also, research finds that direct method information is reflected in stock prices indicating that users appear to utilize this information when available. However, there are, as of yet, no studies detailing how this information makes its way into stock prices. Finally, the evidence we review suggests that direct method information is economically significant and that the recurring benefits that many firms derive from providing direct method information likely exceed recurring costs. Our review should be of interest to academics researching cash flow reporting and also to policy makers as they continue debating the merits of the direct method presentation of operating cash flows.
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MD ARIS, NAZARIA, RAZMAN ANUAR, Ivan Trofimov, and Nurhidayah Sokat. "The Effect of Cash Flows on Firm’s Profitability of Construction Sector in Malaysia." UNIMAS Review of Accounting and Finance 2, no. 1 (December 26, 2019): 31–39. http://dx.doi.org/10.33736/uraf.1984.2019.
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This research investigates the effect of cash flows towards firm’s profitability using the data collected and analysed from listed firms in construction sector on Bursa Malaysia. The sample comprises of 98 firms and the data is for 6 years throughout January 2009 to December 2015. For the purpose of this analysis, a discriminatory panel regression and Pearson correlation are used to test the hypotheses. This research uses cash flow from operations (CFO), cash flow from investments (CFI), and cash flow from financing (CFF) activities as independent variables to measure cash flows. In order to measure the firm’s profitability, this research uses Return on Assets (ROA) as the dependent variable. The result from this research reveals that cash flows from operations (CFO) and cash flow from investments (CFI) has a significant and positive impact on the profitability of the firms. The findings also show there is a negative relationship exists between cash flow from financing (CFF) and firm’s profitability.Thus, taking all into consideration, this research provides insights to the business managers in overseeing the cash for ongoing operations, controlling the investing strategy and tracking the financing activities for survival and growth of the organisation. On the other hand, other stakeholders of the business use historic cash flows in this information set to make projections for future cash flows investment decisions.
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Farshadfar, Shadi. "The usefulness of operating cash flow information: Does format matter?" Corporate Ownership and Control 10, no. 1 (2012): 44–52. http://dx.doi.org/10.22495/cocv10i1art4.
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This study investigates whether the direct method of presenting cash flows from operations is superior to the indirect method in its ability to forecast future cash flows. It also considers the effect of industry characteristics on the relative usefulness of direct and indirect methods of cash flow presentation. The study, which uses a sample of Australian firms, finds that both the direct and indirect methods improve the forecast of future cash flows. However, the indirect method of reporting cash flows from operations is more relevant than the direct method in predicting future cash flows. Evidence from the industry-level analysis overall reinforces the main results.
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Irawan, Sheila, and Yie Ke Feliana. "KEMAMPUAN LABA UNTUK MEMBERIKAN INFORMASI LABA PERIODE MENDATANG DAN ARUS KAS OPERASI PERIODE MENDATANG SELAMA PERIODE KONVERGENSI IFRS DI INDONESIA." CALYPTRA 5, no. 2 (March 1, 2017): 196. http://dx.doi.org/10.24123/jimus.v5i2.3088.
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Abstrak - Penelitian ini bertujuan untuk melihat dampak adopsi IFRS secara bertahap khususnya dalam kemampuan earnings periode ini untuk memberikan informasi future earnings dan future cash flows from operations selama periode konvergensi IFRS di Indonesia dengan membandingkan kemampuan earnings untuk memprediksi future earnings dan future cash flows from operations tiap periode. Penelitian ini menggunakan pendekatan secara kuantitatif dengan badan usaha yang terdaftar di BEI selama periode 2010-2013 sebagai objek penelitian. Jumlah sampel yang digunakan pada penelitian ini adalah 420 badan usaha. Temuan penelitian menunjukkan bahwa tidak ada peningkatan hubungan antara earnings periode berjalan dengan future earnings, namun ada peningkatan hubungan antara earnings periode berjalan dengan future cash flows from operations. Hal ini terjadi karena adopsi IFRS menuntut perusahaan untuk lebih transparan dengan adanya full disclosure, sehingga net income kurang dapat dimanipulasi mengakibatkan earnings yang terjadi periode ini belum tentu berulang di periode selanjutnya yang menyebabkan menurunnya kemampuan untuk memprediksi future earnings, namun meningkatkan kemampuan untuk memprediksi future cash flows from operations karena laba yang terjadi periode tersebut berhubungan erat dengan arus kas dari aktivitas operasional di periode selanjutnya.
Kata kunci : Current Earnings, Future Earnings, dan Future Cash Flows from Operations
Abstract – This study aims to look at the impact of the adoption of IFRS gradually, especially the ability of current earnings to provide information about future earnings and future cash flows from operations during the period IFRS convergence in Indonesia by comparing the ability of earnings to predict future earnings and future cash flows from operations of each period. This study uses a quantitative approach to all of the business entity listed on the Stock Exchange during the period 2010-2013 as the research object. The samples used in this study were 420 business entities. The study's findings that there is no increasing relationship between the current earnings and future earnings, but there is an increasing relationship between current earnings and future cash flows from operations. This happens because of the adoption of IFRS requires companies to be more transparent with their full disclosure, so net income is less manipulated, it makes earnings that occurred this period may not be repeated in the next period which led to a decreased ability to predict future earnings, but improving the ability of current earanings to predict future cash flows from operations because current earnings are more closely related to future cash flow from operating activities.
Keywords : Current Earnings, Future Earnings, and Future Cash Flows from Operations
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Lee, Lian Fen. "Incentives to Inflate Reported Cash from Operations Using Classification and Timing." Accounting Review 87, no. 1 (August 1, 2011): 1–33. http://dx.doi.org/10.2308/accr-10156.
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ABSTRACT This study examines when firms inflate reported cash from operations in the statement of cash flows (CFO) and the mechanisms through which firms manage CFO. CFO management is distinct from earnings management. Unlike the manipulation of accruals, firms cannot manage CFO with biased estimates, but must resort to classification and timing. I identify four firm characteristics associated with incentives to inflate reported CFO: (1) financial distress, (2) a long-term credit rating near the investment/non-investment grade cutoff, (3) the existence of analyst cash flow forecasts, and (4) higher associations between stock returns and CFO. Results indicate that, even after controlling for the level of earnings, firms upward manage reported CFO when the incentives to do so are particularly high. Specifically, firms manage CFO by shifting items between th estatement of cash flows categories both within and outside the boundaries of generally accepted accounting principles (GAAP), and by timing certain transactions such as delaying payments to suppliers or accelerating collections from customers. Data Availability: Data are available from public sources identified in the study.
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Mostafa, Wael. "The incremental value relevance of cash flows and earnings affected by their extremity." Management Research Review 39, no. 7 (July 18, 2016): 742–67. http://dx.doi.org/10.1108/mrr-03-2015-0069.
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Purpose In contrast to earlier studies, the most recent studies on the incremental value relevance of earnings and cash flows from operations find that both earnings and cash flows have incremental value relevance beyond each other. An interesting question that follows is whether these findings hold after controlling the extremity of earnings and cash flows. This study, therefore, aims to examine the incremental value relevance of earnings and cash flows in the following four cases: moderate earnings and moderate cash flows, moderate earnings and extreme cash flows, extreme earnings and moderate cash flows and extreme earnings and extreme cash flows. Design/methodology/approach To evaluate the incremental value relevance (information content) of earnings and cash flows for each of the four cases mentioned above, we examine the statistical significance of the slope coefficients for regression of returns on both unexpected earnings and unexpected cash flows from operations. Findings The results show that (i) both moderate and extreme earnings have incremental value relevance beyond both moderate and extreme cash flows, (ii) moderate cash flows have incremental value relevance beyond both moderate and extreme earnings and (iii) extreme cash flows lack incremental value relevance beyond moderate earnings; however, they (extreme cash flows) have incremental value relevance beyond extreme earnings. These results suggest that earnings and cash flows have incremental value relevance. However, only in cases when cash flows are extreme and earnings are moderate, cash flows do not possess incremental value relevance. In further analysis, we find that the value relevance for cash flows and earnings decreases when they are extreme and transitory. Moreover, the value relevance for cash flows increases when they are moderate (not extreme) and the other competing measure (earnings) is transitory and extreme. Practical implications The results support the idea that earnings and cash flows from operations complement each other in explaining variation in returns. However, when cash flows are extreme and less informative, investors rely more on earnings in firm valuation, especially when earnings are moderate. Because earnings are unlikely to persist to be permanent across the years, these results can be interpreted as indicating that cash flows and earnings information are used jointly by investors. Originality/value In contrast to previous studies, we control for the extremity of earnings and cash flows when evaluating the incremental value relevance of earnings and cash flows from operations.
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Vent, Glenn A., and Anthony F. Cocco. "Teaching the Cash Flows from Operations Section of the Statement of Cash Flows under the Indirect Method: A Conceptual Framework." Journal of Education for Business 71, no. 6 (August 1996): 344–47. http://dx.doi.org/10.1080/08832323.1996.10116810.
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Cheng, C. S. Agnes, Chao-Shin Liu, and Thomas F. Schaefer. "Earnings Permanence and the Incremental Information Content of Cash Flows from Operations." Journal of Accounting Research 34, no. 1 (1996): 173. http://dx.doi.org/10.2307/2491338.
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Janjani, Reza. "Comparing US-GAAP and Iran-GAAP operating cash flows to predict future cash flows." Journal of Financial Reporting and Accounting 13, no. 1 (July 6, 2015): 39–65. http://dx.doi.org/10.1108/jfra-06-2013-0047.
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Purpose – The main objective of this paper is to compare the ability of US-generally accepted accounting principles (GAAP) operating cash flows versus Iran-GAAP operating cash flows in predicting future cash flows. Design/methodology/approach – The sample comprises 240 firms (1,200 firm-years) during the period from 2004 to 2008 for which operating cash flows and other variables are available. Cross-sectional and panel data regression models are used in testing the hypotheses. Findings – This study finds that operating cash flows based on Iran-GAAP are no more effective in predicting future cash flows than those based on USA-GAAP, and the predictive ability of the model is improved by adding the earnings accrual components to the operating cash flows. Originality/value – The study suggests that the Iranian accounting standard setting committee recommends that the statement of cash flows be prepared based on the three-category model instead of the five-category model in an attempt to converge with the International Financial Reporting Standards. Consistent with Financial Accounting Standards Board and financial analyst recommendations, the results reveal that earnings are a better predictor than cash flows from operations.
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Mostafa, Wael. "The relative information content of cash flows and earnings affected by their extremity." Managerial Finance 40, no. 7 (June 3, 2014): 646–61. http://dx.doi.org/10.1108/mf-06-2013-0128.
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Purpose – Many studies examine the relative information content of earnings and cash flows from operations. Most studies find that earnings have higher information content than cash flows. An interesting question that follows is whether these findings hold after controlling the extremity of earnings and cash flows. The purpose of this paper is to examine the relative information content of earnings and cash flows in the following four different cases: first, moderate earnings vs moderate cash flows, second, extreme earnings vs moderate cash flows, third, moderate earnings vs extreme cash flows, and fourth, extreme earnings vs extreme cash flows. Design/methodology/approach – To assess the relative information content of earnings and cash flows for each of the four cases mentioned above, the authors compare the explanatory power for regression of returns on unexpected earnings relative to regression of returns on unexpected cash flows. Therefore, the author compares the adjusted R2 of the model with earnings variables and the model with cash flows variables using Vuong's test, that examines the statistical significance of the difference between adjusted R2s of the rival (non-nested) models, and interpret a statistically higher adjusted R2 as an indicator for higher relative information content. Findings – The results show that: first, when both earnings and cash flows are moderate, earnings are more highly associated with stock market price changes than cash flows, second, when both earnings and cash flows are extreme, earnings also have greater relative information content than cash flows, third, when the extremity differs between earnings and cash flows, the moderate variable is superior to the other extreme variable in explaining security returns. These results suggest that earnings are definitely more value relevant than cash flows. However, only in cases when cash flows from operations are moderate and earnings are extreme, cash flows possess higher information content than earnings. Practical implications – The explanatory power for stock returns will be higher for earnings or cash flows depending on which is more highly persistent. This result reverses the conventional finding of the superiority of earnings over cash flows in explaining security returns. Originality/value – In contrast to previous studies, the authors control for the extremity of earnings and cash flows when evaluating the relative information content of earnings and cash flows from operations.
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Alsharif, Bader M., Talal M. Bataineh, and Khaled M. Abo Aliqah. "Cash Flows and Earnings for Share in Islamic Banks: Jordanian Evidence." International Journal of Business and Management 15, no. 12 (November 6, 2020): 15. http://dx.doi.org/10.5539/ijbm.v15n12p15.
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This study provides evidence on the effect of cash flows extracted from operating, investing, and financing activities attributed to the net profit, total assets or liabilities on the return per share for Jordan Islamic Bank, International Islamic Arab Bank, and Al-Rajhi Islamic Bank. The methodology is based on panel regression analyses of annual report data for Jordan listed Islamic Banks for the year from 2005 to 2019. The return on a stock plays an important role in investing and financing operations. Thus, the cash flows are weak in the short term and quickly increase in the long run. Results show a negative relationship between cash flow and return on a stock, except for cash flows from operating activities, which have a positive relationship with the return on a stock in the second and third models. The reason for this positive relationship is either the increase in operations from untapped money does not increase the size of assets or liabilities or the decrease in operations leads to an increase in profits and thus an increase in the return on the stock. This association indicates moderation in maintaining the amount of cash. Any risk facing the bank from withdrawals or financing operations is covered without affecting the size of the bank’s profits until the turnout by investors increases and the profit increases.
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Ali, Ashiq. "The Incremental Information Content of Earnings, Working Capital from Operations, and Cash Flows." Journal of Accounting Research 32, no. 1 (1994): 61. http://dx.doi.org/10.2307/2491387.
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Billings, Bruce K., and Richard M. Morton. "The Relation Between SFAS No. 95 Cash Flows From Operations and Credit Risk." Journal of Business Finance Accounting 29, no. 5&6 (June 2002): 787–805. http://dx.doi.org/10.1111/1468-5957.00450.
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,, Meythi. "PENGARUH ARUS KAS OPERASI TERHADAP PERUBAHAN DIVIDEN DENGAN AKRUAL SEBAGAI VARIABEL MODERATING." Media Riset Akuntansi, Auditing dan Informasi 8, no. 3 (December 12, 2008): 258. http://dx.doi.org/10.25105/mraai.v8i3.983.
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<p class="Style2">This research is aimed to examine and find out empirical evidence of the influence cash flows from operations on dividend changes with accrual as the moderating variable. The contributions of this study are twofold. First, suggesting the investors to use cash flows from operations when the predict dividend yield or dividend changes. Second, enriching literature on financial field.The hypothesis was tested by multiple regressions analysis for 30 firm on Indonesian Stocks Exchange (IDX) for period 1999 until 2005 with 95% confidence interval. The data are collected using purposive sampling method. The association between cashflows from operations and dividend changes are measured by Lintner's autoregresive dividend policy model (1956). The dividend changes are measured by using Firm-Specific Coefficients Methodology (FSCli<sup>,</sup> 0. This study provides evidence that accrual hasn't impact on the association between cash flows from operations and dividend changes. Thus, thehypothesis ofthe research is not empirically supported.</p>Keywords: Cash Flows from Operations, Dividend Changes, andAccrual
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Cindori, Sonja, and Jelena Slović. "Identifying Money Laundering in Business Operations as a Factor for Estimating Risk." INTERNATIONAL JOURNAL OF INNOVATION AND ECONOMIC DEVELOPMENT 3, no. 3 (2017): 7–16. http://dx.doi.org/10.18775/ijied.1849-7551-7020.2015.33.2001.
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Money laundering and terrorist financing can be performed in many ways, regular business operations being among them. Business activities go through a large number of business changes, which offers numerous options for money or assets to enter the company via seemingly legal business transactions, enabling money or assets to remain in regular business flows once money laundering is completed. On the other hand, the opposite scenario, in which there is interest in money to be transferred from regular flows to alternative flows, including terrorism financing, is also common. This paper will discuss legal business operations as a framework for money laundering and terrorist financing. Cash flow cycles are presented in form of an algorithm as connections between irregularly and regularly acquired assets in the process of money laundering through business operations, as well as re-entry from regular flows into alternative cash flows. The “Butterfly Diagram”, presenting groups of business changes enabling entry of larger amounts of money and assets owned by a company in order to be laundered or their exit with the effect or tax evasion or terrorism financing, evolved from the algorithm. Also, the “Butterfly Diagram” includes certain forms of legal and tax misuse which enable legalizing the specified activities. The business reality is exceptionally dynamic and needs of money launderers keep growing, this is why there is an increase in types and numbers of business transactions that can be used for money laundering or terrorism financing, resulting in the need to keep modifying the presented “Butterfly Diagram”.
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Mulenga, Mwila Joseph, and Meena Bhatia. "The Review of Literature on the Role of Earnings, Cash Flows and Accruals in Predicting of Future Cash Flow." Accounting and Finance Research 6, no. 2 (March 22, 2017): 59. http://dx.doi.org/10.5430/afr.v6n2p59.
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AbstractResearch on the relative ability of accounting information aims in examining the ability of accounting information to predict future cash flow and earnings, based on the assertion given by Financial Accounting Standard Board (FASB) which states that the earnings and its components have a better predictive power than cash flow itself (FASB,1978 para 44). Many studies have been conducted by various researchers but only few of these studies succeed to match with this assertion. This study aims to provide review on the study related to ability of earnings, cash flows from operations and accruals to predict future cash flows where methodology used in this line of research and presentation of empirical results are discussed. The review provides in depth discussion for the purpose of assisting the researchers to get familiarity with line of financial accounting research investigated capital market based accounting research and also as guidance for future researchers.Keywords: Cash flow from operations, Earnings, Accruals, Prediction, Capital Market Based Accounting Research.
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Ferry, Ferry, and Erny Ekawati. "PENGARUH INFORMASI LABA AKUNTANSI, ALIRAN KAS DAN KOMPONEN ALIRAN KAS TERHADAP HARGA SAHAM PADA PERUSAHAAN MANUFAKTUR DI INDONESIA." Jurnal Riset Akuntansi dan Keuangan 1, no. 2 (August 1, 2005): 79. http://dx.doi.org/10.21460/jrak.2005.12.114.
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Brfoo 1994, the one way measurcd pdormance of go public compa4y is earning afier tu, but on September 7, 1994 the Indonesian Institute olAccountants (IAI) published the statement of financial Accounting Standard (PSAK) No.2, "statement of Cash Flows" requires companiesto pubtish the statewent of cash flows beginning from January I, tggs. So investors had two kinds measurement of performance go public companies.The objective of study is to aplain the influence of informationcontent of accounting income, total cash Jlows, and components of cash flow with stock price in lidonesian manufacuring firms The accounting income is earning afiir ta,tc before extra ordinary item and discontinued operations and total cash flows is a sum of cash flow from operating activities, cash llow from investing activities, and cash tlow from financing activities.This study was constitute replicated study from Triyono and Yogiyanto (2000) about the association of information content of total cash flows, components of cash Jlows, and accoun:ting income with stock prices or stock returns. This study took sample frorn manufacnring firms lisfed in the Jakarta Stock Exciange @ni) from 1999-iOOZ tnoT"had pubtished aadited financial statement. Stock prices using monthly prices that hadended December 1999-2002. The statistics method used to test ltypotheses is a linier multiple regression. The model was considered: levek')odet. The empirical results with using the first model levels about the influ. hence information of accounting income and total cash flows with stock prices can be explained accounting income gave positive influence and significant with stock prices whereas total cash flows gcMe negative and tlgnil*nt with stock prices. In the second model levels about the influ- ,i"i ,nyn *ation of cash flow from operating actiu.ities, cash flow from investing activities, and cash flow from financing octivities with stock pri, i* b" explained, separated total gash fl9ws into.yomponents. of 'cash flows gave negative influence and significant with stock prices "rp"ifolly iash ltoi from aperating octivities and c-ash flow from finincing activities. In the third model levels obout influence information of acciunting income and components of cash Jlows with stock prices irn be expliined, accounting income gave positive inlluence and significont with stock prices whereas companents of cosh tlows gNe negative influence and significant with stock prices'Keywords : accounting Income, cash Flows, components of cashflows, levels model
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Jang, Geun Bae, and Weon-Jae Kim. "Effects Of Key Financial Indicators On Earnings Management In Korea’s Ready Mixed Concrete Industry." Journal of Applied Business Research (JABR) 33, no. 2 (March 1, 2017): 329–42. http://dx.doi.org/10.19030/jabr.v33i2.9905.
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Earnings management is the practice of deriving certain benefits by intervening in external financial reporting or misleading certain stakeholders through adjustments to accruals without cash flow involvement or with affecting cash flows through real activities. Using the models of Kothari et al. (2005) and Cohen et al. (2008) for accrual-based earnings management (AEM) and real activities earnings management (REM), respectively, we examined whether relationships exist between key financial indicators, such as cash flows from operations, operating income, and debt dependency level, and AEM and REM in the ready mixed concrete (RMC) industry in Korea. This study is the first to investigate earnings management in Korea’s RMC sector. Results showed that operating income and cash flows from operations are significantly negatively related to AEM and REM, consistent with the findings of previous research. By contrast, debt dependency exhibits no significant relationship with AEM and REM, contradicting the findings of most previous studies. As a moderating variable, operating income affects the relationship between cash flows from operations and earnings management with only REM. On these bases, we can infer that earnings management in the Korean RMC industry responds differently to key financial indicators with regards to AEM and REM practice. Overall, companies in the industry implement aggressive earnings management depending on operating income and cash generation ability level rather than debt dependency level. These findings provide important insights for people who are interested in accounting information on the RMC industry in Korea.
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Takhtaei, Nasrollah, and Hassan Karimi. "Relative Ability of Earnings Data and Cash Flow in Predicting Future Cash Flows." International Journal of Accounting and Financial Reporting 3, no. 1 (June 2, 2013): 214. http://dx.doi.org/10.5296/ijafr.v3i1.3803.
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The purpose of this study is to examine earnings relative ability, operational cash flow, and two traditional measures of cash flows namely net earnings plus depreciation and operational working capital in predicting future cash flows. Also, the effect of company size on ability of predictive measures mentioned is examined in this study. The population examined includes accepted companies in Tehran Stock Exchange during period from 2005 to 2009. The results indicate that net earnings have more ability than operational cash flows and its traditional proxies in predicting the cash flows future. These findings are consistent with Financial Accounting Standards Board (FASB) claim based on earnings in preference on cash flows in predicting future cash flows.
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Bala, Sayed Abbas. "The Relationship between Cash Flows and Stock Returns: An Empirical Study of Financial Investment Banks on the Khartoum Stock of Exchange." Applied Finance and Accounting 3, no. 2 (March 14, 2017): 14. http://dx.doi.org/10.11114/afa.v3i2.2236.
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This study aims to test the relationship between cash flows from operational, investment, and financing activities individually and jointly, and the stock returns of financial investment Banks on the Khartoum stock exchange. Using an analytical approach, the study analyzes the financial statements for 2010-2015. The statistical analysis showed no statistically significant relationship between cash flows from operations, investment, and financing activities individually or jointly, and stock returns of financial investment Banks on the Khartoum Stock Exchange. This study yielded several recommendations such as that the statement of cash flows requires a special awareness because it provides important, quality information that reflects the ability of the firm to meet obligations and function as a going concern, which is useful for users in making decisions.
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Lian, Chen, and Yueran Ma. "Anatomy of Corporate Borrowing Constraints*." Quarterly Journal of Economics 136, no. 1 (September 24, 2020): 229–91. http://dx.doi.org/10.1093/qje/qjaa030.
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Abstract Macro-finance analyses commonly link firms’ borrowing constraints to the liquidation value of physical assets. For U.S. nonfinancial firms, we show that 20% of debt by value is based on such assets (asset-based lending in creditor parlance), whereas 80% is based predominantly on cash flows from firms’ operations (cash flow–based lending). A standard borrowing constraint restricts total debt as a function of cash flows measured using operating earnings (earnings-based borrowing constraints). These features shape firm outcomes on the margin: first, cash flows in the form of operating earnings can directly relax borrowing constraints; second, firms are less vulnerable to collateral damage from asset price declines, and fire sale amplification may be mitigated. Taken together, our findings point to new venues for modeling firms’ borrowing constraints in macro-finance studies.
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Rahman, Abdul, and Raj Bahadur Sharma. "Cash flows and financial performance in the industrial sector of Saudi Arabia: With special reference to Insurance and Manufacturing Sectors." Investment Management and Financial Innovations 17, no. 4 (November 6, 2020): 76–84. http://dx.doi.org/10.21511/imfi.17(4).2020.07.
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A firm with proper cash flow management can increase its financial performance, while improper management might lead to financial failure. Therefore, it is significant for a firm to manage cash inflows and outflows properly. The current study investigates the effect of cash flow from operations (CFOs) on the financial performance of insurance and manufacturing companies in Saudi Arabia. The data were extracted from companies’ annual reports by considering Return on Assets (ROA) and Return on Equity (ROE) as dependent variables, CFOs as an explanatory variable, firm size (SIZE) and Leverage (LEV) as control variables, and an industry dummy. The results report a positive and significant association between financial performance (ROA and ROE) and operating cash flows (CFOs), and a negative association for SIZE and LEV. Therefore, the study concludes that the firms’ operating cash flows in the insurance and manufacturing sectors in Saudi Arabia affect financial performance.
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Agnes Cheng, C. S., and Simon S. M. Yang. "The Incremental Information Content of Earnings and Cash Flows from Operations Affected by Their Extremity." Journal of Business Finance Accounting 30, no. 1-2 (January 2003): 73–116. http://dx.doi.org/10.1111/1468-5957.00484.
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ZHASSIM MOHAMMAD, MOHAMMAD TARIK. "IMPROVING THE TERMINOLOGY AND CLASSIFICATION OF CASH FLOWS FOR THE PURPOSES OF THEIR EFFECTIVE ACCOUNTING AND ANALYSIS AT THE ENTERPRISE." EKONOMIKA I UPRAVLENIE: PROBLEMY, RESHENIYA 4, no. 4 (2021): 194–200. http://dx.doi.org/10.36871/ek.up.p.r.2021.04.04.035.
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The article examines the theoretical approaches of Russian and foreign authors to the content of the term «cash flow» and their classification. An analysis of the approaches of different researchers and the legal framework for the organization and the reflection of cash flows in the accounting of the enterprise allowed us to conclude that there is no balanced term that would contribute to the formation of a high-quality information basis for financial management purposes. The proposed approach to grouping cash flows from the position of their maximum and minimum values for the purpose of forming optimal balances, sufficient volumes for making payments, effective planning not only in the short-term, but also in the medium-term will allow pur-poseful accounting, analysis and planning of cash flows from various types of operations in the course of the activity of a commercial organization.
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Cardilla, Aprilia Louise, Mochamad Muslih, and Dedi Rianto Rahadi. "PENGARUH ARUS KAS OPERASI, UMUR PERUSAHAAN, DAN UKURAN PERUSAHAAN TERHADAP KINERJA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2011-2016." Firm Journal of Management Studies 4, no. 1 (May 3, 2019): 66. http://dx.doi.org/10.33021/firm.v4i1.686.
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<p>Among the 3 (three) cash flows contained in a company, the cash flows from operations are considered to be the most important cash flow in the company and most determine the success of the company in achieving its main objective, namely profit optimally. The purpose of this study was to study the effect of cash flows from operating activities, company size, and company age on company profits. The research method used is the quantitative research method, using the ordinary least square method. The unit of analysis is the company. Sample selection is done purposively. The sample is 12 banking companies listed on the Bursa Effek Indonesia.<br />The results showed that cash flows from operating activities and company size did not have a significant effect on corporate profits. The age variable of the company turned out to have a significant effect on company profits, but the sign or the coefficient was reversed. This means that the older the company age, the lower the company's profit.</p>
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Lorek, Kenneth S., and G. Lee Willinger. "Multi-Step-Ahead Quarterly Cash-Flow Prediction Models." Accounting Horizons 25, no. 1 (March 1, 2011): 71–86. http://dx.doi.org/10.2308/acch.2011.25.1.71.
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SYNOPSIS: We provide new empirical evidence supportive of the Brown-Rozeff ARIMA model as a candidate univariate statistically based expectation model for multi-period-ahead projections of quarterly cash flows. It provides 1- through 20-step-ahead projections of quarterly cash flows that are significantly more accurate than those generated by the premier multivariate quarterly time-series, disaggregated-accrual regression model popularized by Lorek and Willinger (1996). We also find that both quarterly earnings and quarterly cash flow from operations are modeled by the same Brown-Rozeff ARIMA structure, although the autoregressive and seasonal moving-average parameters of the quarterly earnings model are significantly larger than those of the cash-flow prediction model. This finding is consistent with Beaver (1970) and Dechow and Dichev (2002), among others, who argue that accounting accruals induce incremental amounts of serial correlation in the quarterly earnings time series vis-a`-vis the time series of quarterly cash flows. Such findings may be of interest to analysts who wish to derive multi-step-ahead cash-flow predictions, and accounting researchers attempting to adopt a statistical proxy for the market’s expectation of quarterly cash flows. Finally, we propose a forecasting schema by which statistically based cash-flow forecasts are adjusted upwards or downwards via qualitative assessments regarding the economy, industry, and firm by analysts employing fundamental financial analysis.
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Kenner, Bartholemew, Dayton M. Lambert, Carlos Omar Trejo-Pech, Jada M. Thompson, and Thomas Gill. "Financial risks in Rwandan smallholder broiler production." Journal of Agribusiness in Developing and Emerging Economies 9, no. 5 (October 14, 2019): 569–83. http://dx.doi.org/10.1108/jadee-11-2018-0163.
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Purpose The purpose of this paper is to determine the stochastic net present value (NPV) of a model smallholder poultry operation in Rwanda under production and market uncertainty. Design/methodology/approach A discounted cash flow calculator was used to determine the NPV of operator investments and operating cash flows, including time, materials and capital. Broiler production data, market prices and variable input costs were collected from 125 smallholder operations in the Musanze District, Rwanda. These data were combined with a historical price index tracking the inflation rate of Rwanda’s currency. Policies including overstocking, technical support repayment scheduling, selling broilers at a spot market price, using marketing contracts and selling poultry manure were compared using non-parametric paired comparisons and stochastic dominance. Findings Risk-neutral and risk-averse producers would prefer overstocking, delaying repayment of technical support services and selling manure to status quo operational policy. No differences were observed between the option to sell birds at spot market prices or through contracts. Research limitations/implications This analysis demonstrates how individual managerial or an intervention in smallholder broiler production affects financial performance. Practical implications To mitigate risk associated with this novel enterprise, producers should consider overstocking birds. If local markets for manure were developed, the risks faced by new or beginning poultry operators could be mitigated. Originality/value A stochastic, discounted cash flow model calculator was used to determine the NPV and discounted payback period of operator investments and operating cash flows, including time, materials and capital.
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Mostafa, Wael. "The value relevance of earnings, cash flows and book values in Egypt." Management Research Review 39, no. 12 (December 12, 2016): 1752–78. http://dx.doi.org/10.1108/mrr-02-2016-0031.
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Purpose Motivated by the lack of research on the value relevance of accounting information in the emerging markets of Middle Eastern countries, and the unique institutional and accounting setting in Egypt, this paper aims to investigate the relation between capital market and accounting information in the emerging market of Egypt. Specifically, based on Egyptian data, this study examines the value relevance of earnings, cash flows from operations and book values. Design/methodology/approach To examine the value relevance of the above accounting measures, this study uses statistical associations between accounting information and capital market values: the association between earnings and annual returns; the association between cash flows and accruals, and annual returns; and the association between earnings and book values of equity, and stock prices. Findings The results show that, first, earnings have value relevance. However, earnings changes are significantly more successful than earnings levels in explaining security returns. These results suggest that changes in earnings are largely permanent; hence, earnings follow (close to) a random walk model. Second, contrary to what is stated in the literature, cash flows from operations are not successful in explaining stock returns. This result suggests that cash flows are less important and not value relevant in Egypt compared to the USA or the UK. A possible explanation is that cash flows in Egypt are very volatile (high variance) and not persistent, so the market does not rely on them. Third, individually, both earnings and book values significantly explain stock prices; however, jointly, earnings have incremental explanatory power beyond book values for stock prices whereas book values do not. These results suggest that in Egypt the income statement is much more important than the balance sheet for valuation purposes. Overall, these results are interesting because they do not completely replicate the results from other countries. Practical implications The existence of value relevance for earnings despite the apparent lack of value relevance for cash flows can be interpreted as indicating that accruals are designed to offset and smooth cash flows’ volatility and low value relevance, so that earnings are relatively more persistent and relevant. These results show that earnings potentially are a much more important and informative measure of a firm’s value than cash flows from operations in Egypt. However, we certainly need the cash flows information as an ex-post validation of the prior earnings. Overall, it appears that the investors in Egypt are looking at the accounting data when evaluating the value of the firm, which is a good sign. However, the empirical findings of this paper are discussed. Originality/value This study contributes to the limited research on value relevance of accounting information in the emerging market of Egypt.
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Shaharuddin, Sara Naquia Hanim, Radziah Mahmud, Nor Khadijah Mohd Azhari, and Widya Perwitasari. "Company Performance during Covid-19: Impact of Leverage, Liquidity and Cash Flows." Environment-Behaviour Proceedings Journal 6, no. 17 (August 15, 2021): 11–16. http://dx.doi.org/10.21834/ebpj.v6i17.2878.
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Due to the movement control order, company performance is predicted to be highly affected by Covid-19 pandemic. Thus, this study seeks to examine the impact of leverage, liquidity and cash flows from operations towards company performance during the Covid-19 pandemic. Using secondary data from public listed companies on Bursa Malaysia with two financial quarters in the financial year 2020, it is found that there is a significant impact of liquidity and cash flows from operations on company performance. This study may contribute as additional literature to future studies and provide sights to regulators in dealing with the pandemic outbreak. Keywords: Covid-19; leverage; liquidity; cash flows eISSN: 2398-4287© 2021. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v6i17.2878
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Kim, Jeong-Jae. "Impact of Correlation between Cash Flows from Operations and Accruals on the Value Relevance of Earnings." Korean Data Analysis Society 21, no. 2 (April 30, 2019): 961–71. http://dx.doi.org/10.37727/jkdas.2019.21.2.961.
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Maciel, Flávia Fonte de Souza, Bruno Meirelles Salotti, and Joshua Onome Imoniana. "Incentives for accounting choices in Cash Flows Statements." Revista Contabilidade & Finanças 31, no. 83 (August 2020): 244–61. http://dx.doi.org/10.1590/1808-057x201908670.
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ABSTRACT This study sought to identify incentives that influence the accounting choices for classifying interest and dividends received or paid in Cash Flow Statements (CFSs), in the period from 2008 to 2014, in non-financial companies of the Brazilian capital market. The hypotheses refer to the effect of the choice of classification for interest and dividends over cash flow from operations (CFO), according to indebtedness, profitability, size, negative CFO, sector, and auditor. This article seeks to contribute by providing evidence on the accounting choices for classification in CFSs, considering the lack of consensus in the results of studies in the Brazilian capital market and helping to better understand these accounting choices and the incentives behind them. A correct understanding of the information in CFSs is fundamental for them to be useful to their users. The existence of accounting choices for classification in CFSs may directly affect this understanding and, consequently, their usefulness. The results help in better understanding the discretion contained in CFSs, enabling the correct use of their information. They can also generate evidence for regulatory bodies to rethink their accounting rules and for academia to direct future research. Two panel data models were developed, using a sample of 352 companies, 2,290 analyzed reports, and 3,764 data items. The results indicate that companies with a greater level of debt, profitability, and size make their accounting choices in order to report higher CFO in the CFS. The evidence obtained reinforces the international findings and adds new analyses in the Brazilian context, contributing to the development of accounting choice theory.
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Onikiienko, Serhii, Yevheniia Polishchuk, Alla Ivashchenko, Anna Kornyliuk, and Nazar Demchyshak. "Prior credit assessment of long-term SME projects with non-standard cash flows." Banks and Bank Systems 16, no. 2 (June 17, 2021): 148–58. http://dx.doi.org/10.21511/bbs.16(2).2021.14.
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Over the past three decades, the relative bank loan demand has changed due to the arising small and medium-sized enterprises (SMEs). Therefore, banks in their operations face the problem of processing an ever-increasing number of loan applications. The aim of this paper is to develop an auxiliary approach to assessing the prior creditworthiness of long-term SME projects with nonstandard cash flows.This study reveals how the principles of value-based management can be incorporated into the process of borrower’s creditworthiness assessment to improve the process of screening loan applications. For this, the internal rate of return was used as a criterion for loan granting decision at the initial stage of loan underwriting.An algorithm for the preliminary evaluation of loan applications is proposed and is based on the principle of maximizing the shareholder value of banks. This algorithm helps to define the credit terms taking into consideration the distribution of positive cash flows throughout the project’s expected economic life, calculate the possible real effective interest rate concerning the borrower’s nonstandard cash flow schedule, make a rough analysis on the economic efficiency of lending and state the necessary criterion to initiate the procedure of loan underwriting for the projects with nonstandard cash flow schedules. The proposed estimation algorithm stemming from the IRR-approach for the cash flow analysis can also be initially used by a borrower as a tool for credit solvency self-testing via screening of periods with corresponding cash flows that can be used for loan servicing.
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Solodov, A. A. "Stochastic Method of Discounted Cash Flows." Statistics and Economics 18, no. 1 (March 3, 2021): 67–74. http://dx.doi.org/10.21686/2500-3925-2021-1-67-74.
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The method of discounted cash flows (DCF) is one of the main and popular methods of economic assessment of business, which is used all over the world. However, the actual behavior of business projects evaluated by this method often differs from that predicted, and the difference can be tens of times.It should be noted that at present, the discounted cash flow method is a subject of extensive literature, but there are no analytical arguments for large discrepancies between the theory and practice of the method. The aim of the study is to provide a theoretical explanation of the forecasting errors inherent in the discounted cash flow method. The research method is related to the analysis of the traditional method of discounted cash flows, which shows that the key indicator that affects the final result is the net income for a certain period of time. Analyzing the economic content of the flows that appear in the formation of net income, we can conclude that for a trade-type enterprise, the cash flow of receipts associated with current operations is significantly random and, therefore, requires the use of stochastic description methods.The paper offers a mathematical model of the mentioned cash flow. It is assumed that the event associated with a purchase (cash receipt) is modeled on the time axis by a point with a random time of occurrence. Then, obviously, the number of points n that appear on a fixed time interval will be a random number. A justification is given for the fact that the point process is a Poisson random point process or simply a Poisson point process, in which the times of occurrence of points W1 ,W2 , ..., Wi and their number N(t) at time t are random variables. We introduce the function λ(t), which characterizes the average number of cash receipts (purchases) per unit of time. From an economic point of view, it is driven by consumer preferences of buyers, and from a mathematic point of view it is a function of the intensity of appearance of points of the Poisson process. The monetary values of purchases made by customers are described by random positive ui values which arise at the Wi moments of the occurrence of shopping events, simulate a random process of cash receipts at the enterprise.Introduction to the consideration of the random Poisson flow of business receipts and their values, which are also random positive values with an arbitrary probability distribution, is the key assumption of the work. The proposed approach allowed us to develop a stochastic model of the company’s revenues, generalize the method of discounted cash flows, obtain a number of simple ratios, and on this basis explain the growth of the method forecast error with an increase in the duration of the forecast horizon.New results of the study are the use of stochastic methods to describe business revenues and expressions obtained on this basis for the variance and standard deviation of the company’s net cash flow, depending on the number of forecasting periods. It is shown that the growth of the standard deviation of the net cash flow, i.e. the forecasting errors, is a fundamental feature of the method in this interpretation. For the initial estimates, a simple expression is obtained and corresponding graphs are given.In conclusion, it is noted that the presented graphs of the behavior of the standard deviation of the method estimates show that the estimate from below of the mentioned deviation slowly grows with an increase in the number of prediction periods and depends only on the number of periods. It is noted that this growth is calculated in relation to the first forecast period, which itself may contain errors, and it is determined only by consumer preferences. Of course, you can choose the forecast period not a month, but, for example, a year, but then the error of the first period will be significantly increased. Thus, this review makes it possible to explain some aspects of the growth of the error of the discounted cash flow method with the forecast time.
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Bhattacharya, Saptarshi, Aparna Gupta, Koushik Kar, and Abena Owusu. "Risk management of renewable power producers from co-dependencies in cash flows." European Journal of Operational Research 283, no. 3 (June 2020): 1081–93. http://dx.doi.org/10.1016/j.ejor.2019.11.069.
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Chakraborty, Suman, Sandeep S. Shenoy, and Subrahmanya Kumar N. "Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India." Investment Management and Financial Innovations 15, no. 4 (December 24, 2018): 356–66. http://dx.doi.org/10.21511/imfi.15(4).2018.29.
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Determinants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.
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GEORGESCU, FLOAREA. "Treasury Financial Management company in the current economic crisis." Journal of Economic Development, Environment and People 4, no. 1 (March 30, 2015): 24. http://dx.doi.org/10.26458/jedep.v4i1.100.
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Abstract. Any management decision has a direct monetary impact on the structure uses and sources of cash. Cash Management aims to permanently maintain a balance between inflows and outflows of cash and cash to predict the impact of any operational decisions that could affect these flows. The success of any business requires good management of all these flows.The principle of this approach is relatively simple: using a minimum of ores to obtain maximum performance in a given period. Cash management is an extremely complex issue, and balancing receipts and payments flow is a constant struggle for survival of firms.In It work we will focus on how they are oriented in a going concern basis, cash inflows and financing needs of current operations. Managers should understand and know the specific movements of cash within the business system, driven daily decisions on operating, investing or financing, and a variety of external circumstances which affect the company. Such decisions and events can affect the company's ability to pay its obligations to obtain credit from suppliers, banks or credit institutions and to maintain an operational level in line with the company's products and services through investments.
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C, Serly, and Astuti Yuli Setyani. "PENGARUH PERUBAHAN KOMPONEN LAPORAN ARUS KAS, PERUBAHAN LABA KOTOR, DAN PERUBAHAN SIZE PERUSAHAAN TERHADAP EXPECTED RETURN SAHAM." Jurnal Riset Akuntansi dan Keuangan 7, no. 1 (February 1, 2011): 39. http://dx.doi.org/10.21460/jrak.2011.71.32.
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The purpose of this study was to examine the effect of changes in thecomponents of cash flows (operating cash flow changes, investment cashflow changes , cash flow funding changes), changes in gross profit,and change the size of the company toward expected return stock ofmanufacturing companies which go public in Indonesia Stock Exchange. The number of companies studied as many as 84 companies listed in Indonesia Stock Exchange with the observation period from 2004 to 2008. The technique used in the data analysis is the technique of multiple linear regression. Results of the study showed that only cash flow operations changes ,investment cash flow changes and gross margin changes that showed significantly influence against expected return stockKata kunci: expected return, size, arus kas operasi, arus kas investasi, laba kotor
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Clubb, Colin. "Discussion of the Incremental Information Content of Earnings and Cash Flows from Operations Affected by Their Extremity." Journal of Business Finance Accounting 30, no. 1-2 (January 2003): 117–24. http://dx.doi.org/10.1111/1468-5957.00001.
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Kondraszuk, Tomasz. "CASH FLOW FOR THE VAT IN THE FARMING." Annals of the Polish Association of Agricultural and Agribusiness Economists XIX, no. 5 (November 30, 2017): 113–18. http://dx.doi.org/10.5604/01.3001.0010.6216.
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The aim of this article is to present the possibility of using farmers’ cash accounting method. It is regarding farmers which resigned from the lump sum and became active paymasters of this tax. The cash method used in the tax and revenue book (PKPiR) was critically evaluated. At the same time, on the example of the Agricultural Accountancy Calendar (RKR), it has been shown that it is possible to integrate accounting with the accounting method of VAT accounting with accounting entries in the RKR enabling direct cash flows from operations, investment, financial and private operations. It is also possible to draw up other financial statements: profit and loss account, balance sheet and changes in equity. For a farmer, the significant benefit of using a cash-flow method is to reduce the risk of congestion resulting from the need to settle VAT before receiving payments from the debtor. For the tax office, the necessity to pay the full payment before claiming the input VAT refund significantly limits the possibility of fraud in this regard.
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Memon, Zulfiqar Ali, Yan Chen, Muhammad Zubair Tauni, and Hashmat Ali. "The impact of cash flow volatility on firm leverage and debt maturity structure: evidence from China." China Finance Review International 8, no. 1 (February 19, 2018): 69–91. http://dx.doi.org/10.1108/cfri-06-2017-0106.
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Purpose The purpose of this paper is to investigate the influence of cash flow volatility on firm’s leverage levels. It also analyzes how cash flow volatility influences the debt maturity structure for the Chinese listed firms. Design/methodology/approach The authors construct the measure for cash flow variability as five-year rolling standard deviation of the cash flow from operations. The authors use generalized linear model approach to determine the effect of volatility on leverage. In addition, the authors design a categorical debt maturity variable and assign categories depending upon firm’s usage of debt at various maturity levels. The authors apply Ordered Probit regression to analyze how volatility affects firm’s debt maturity structure. The authors lag volatility and other independent variables in the estimation models so as to eliminate any possible endogeneity problems. Finally, the authors execute various techniques for verifying the robustness of the main findings. Findings The authors provide evidence that higher volatility of cash flows results in lower leverage levels, while the sub-sampling analysis reveals that there is no such inverse association in the case of Chinese state-owned enterprises. The authors also provide novel findings that irrespective of the ownership structure, firms facing high volatility choose debt of relatively shorter maturities and vice versa. Overall, a rise of one standard deviation in volatility causes 8.89 percent reduction in long-term market leverage ratio and 26.62 percent reduction in the likelihood of issuing debentures or long-term notes. Research limitations/implications This study advocates that cash flow volatility is an essential factor for determining both the debt levels and firm’s term-to-maturity structure. The findings of this study can be helpful for the financial managers in maintaining optimal leverage and debt maturity structure, for lenders in reducing their risk of non-performing loans and for investors in their decision-making process. Originality/value Existing empirical literature regarding the influence of variability of cash flows on leverage and debt maturity structure is inconclusive. Moreover, prior research studies mainly focus only on the developed countries. No previous comprehensive study exists so far for Chinese firms in this regard. This paper endeavors to fulfill this research gap by furnishing novel findings in the context of atypical and distinctive institutional setup of Chinese firms.
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Hartarska, Valentina, and Dennis Nadolnyak. "Financing Constraints and Access to Credit in a Postcrisis Environment: Evidence from New Farmers in Alabama." Journal of Agricultural and Applied Economics 44, no. 4 (November 2012): 607–21. http://dx.doi.org/10.1017/s1074070800024147.
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We use survey data to study the degree to which new farming operations in Alabama were financially constrained after the 2008 financial crisis. Next, we control for farmers' self-selection out of the credit market and identify which farmers were able to secure loans during the period of 2009–2010. The results show that new farmers that started any part of their operation after 2005 were financially constrained but no evidence that their financing constraints were affected by the crisis. As expected, we find that lending was collateral-driven, although lenders also considered farmers' profitability and cash flows.
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Fischer, Mary, Teresa P. Gordon, and Saleha B. Khumawala. "Tax-Exempt Organizations and Nonarticulation: Estimates Are No Substitute for Disclosure of Cash Provided by Operations." Accounting Horizons 22, no. 2 (June 1, 2008): 133–58. http://dx.doi.org/10.2308/acch.2008.22.2.133.
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SYNOPSIS: Not-for-profit entities’ audited financial statements are considered proprietary information, but the World Wide Web provides easy access to financial information from Form 990, the information return filed annually with the Internal Revenue Service. However, Form 990 return does not include potentially useful information for donors, creditors, and regulators such as cash provided by operating activities. Because of articulation of financial statements inherent with the double-entry system, it is theoretically possible to derive operating cash flows from revenues, expenses, and balance sheet accounts that are included on the return. The objective of this study is to determine whether cash from operations can be accurately calculated from Form 990 data. Our analysis includes both simple and more elaborate formulas because complexity may reduce potential usefulness even if accuracy increases. Using 254 observations from two industry groups (higher education and conservation/environmental protection), we compare five formulas. The mean absolute percentage errors of our computations were extremely large for all formulas. Even the formula with the smallest errors produced an amount for cash from operations that was correlated with the actual number for only one of the two industries. The paper also describes articulation problems encountered when a small subsample was examined in more detail. As with similar studies of business entities, it appears that an accurate estimate of cash flow from operating activities cannot be derived from the other financial statements. Therefore, based on the results of this study we recommend that Form 990 should be revised to include selected information from the cash flow statement.
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Carslaw, Charles A., and S. E. C. Purvis. "Megascreens USA Inc.—A Foreign Operations Case." Issues in Accounting Education 22, no. 4 (November 1, 2007): 579–90. http://dx.doi.org/10.2308/iace.2007.22.4.579.
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This relatively short case gives students a comprehensive overview of the steps required to prepare consolidated financial statements under U.S. GAAP when a subsidiary prepares its accounts under a foreign GAAP—in this case, International Financial Reporting Standards (IFRS). While the case is closely based on an actual Australasian company seeking listing in the United States, the product and the exact financial details are disguised. Specifically, the case exposes students to the following: accounting for foreign currency transactions; adjustments to convert foreign GAAP to U.S. GAAP (accounting for license fees); translation of financial statements; change of functional currency; remeasurement of financial statements; and foreign consolidation and statement of cash flows with foreign operations. The case has been field-tested in an advanced accounting course and is also suitable for use in international accounting courses. Both undergraduate and graduate students have profited from the case.