Voluntary Income Reporting

2014 ◽  
Vol 28 (2) ◽  
pp. 277-295
Author(s):  
Philip Beaulieu
Keyword(s):  
Cash Flow ◽  
Value Relevance ◽  
Direct Method ◽  
Cash Flows ◽  
Information Value ◽  
Fund Flows ◽  
Litigation Risk ◽  
Significant Information ◽  
Income Reporting ◽  
Cash Flow Statement

SYNOPSIS This paper proposes a voluntary income-reporting regime, in which firms could choose whether to publish an income statement. Firms choosing not to issue it would report fund flows in a cash flow statement employing the direct method, similar to the cash flow statement advocated by Ohlson et al. (2010). Voluntary income reporting is motivated by managers' numerous motives to manipulate earnings, recent research challenging the value relevance of earnings compared to cash flows, and costs of auditing income, including litigation risk. Another motivation for voluntary income reporting is rising investor dissatisfaction with reported earnings, but unlike many critics in the investing community, the paper does not claim that earnings do not have significant information value. Rather, given recent developments, it is worth reconsidering whether the benefits of reporting accrual earnings exceed the costs for all firms.

Arborista, Inc.: An Instructional Resource Case

2013 ◽  
Vol 28 (3) ◽  
pp. 681-690 ◽  
Author(s):  
Marc P. Picconi ◽  
Kimberly J. Smith ◽  
Alexander Woods
Keyword(s):  
Cash Flow ◽  
Direct Method ◽  
Cash Flows ◽  
Integrated System ◽  
Net Income ◽  
Managerial Accounting ◽  
Early Integration ◽  
Operating Cash Flows ◽  
Cash Flow Statement ◽  
Statement Of Cash Flows

ABSTRACT: This deceptively simple case is intended for use as early as the first day of an M.B.A. core accounting course or as a focused review for an undergraduate accounting course. It achieves three primary objectives: accelerating student learning about the statement of cash flows, emphasizing the importance of both the cash flow statement and the income statement in valuation and capital markets, and introducing the three primary financial statements as an integrated system. The case also features the use of the direct method of presenting operating cash flows, both as a pedagogical tool and to allow interested instructors to increase their focus on that method. We have found that students benefit from the early integration of the cash flow statement, as well as the ability to clearly understand how operating cash flows are similar to—and different from—net income. Finally, the case provides an optional managerial accounting module for instructors who teach a course that integrates financial and managerial accounting.

scholarly journals The impact of cash flow statement components on stock volatility: Evidence from Qatar

2021 ◽  
Vol 18 (2) ◽  
pp. 365-373
Author(s):  
Mo’taz Kamel Al Zobi ◽  
Othman Hel Al-Dhaimesh
Keyword(s):  
Stock Returns ◽  
Cash Flow ◽  
Stock Prices ◽  
Financial Statements ◽  
Cash Flows ◽  
Significant Information ◽  
Stock Volatility ◽  
Study Results ◽  
Cash Flow Statement ◽  
The Impact

The published financial statements are considered one of the most important sources of information that investors rely on in forecasting stock performance or even judging the organization’s ability to cover short-run liabilities. Cash flows play a core role in maintaining a high market value for its shares. Hence, this study came to analyze the explanatory value of the cash flow statement in explaining stock volatility (SV) in the Qatar financial market. Study data were collected using published financial statements from a sample of 44 Qatari-listed companies throughout 2013–2019. A panel cross-sectional data technique using the E-views program was used to analyze the data. The study results show there is a positive and significant impact of cash flows from operating CFO activities on SV, indicating that the higher change in CFO increases stock volatility. This means that operating cash flows give significant information to investors, and it is reflected in the stock price movements directly. Also, the cash flow from CFF financing activities has a positive and significant effect on SV. This means that CFF affects stock prices, causing greater changes and fluctuation in stock returns. This is because one of the major components of CFF is dividends, which affect directly stock prices and stock returns. In contrast, there is an insignificant effect of CFI on SV, which may indicate that investors do not build their investment decisions based on CFI. Accordingly, the cash flow from investing activities failed to explain the stock volatility of the listed Qatari companies.

scholarly journals The impacts of free cash surplus flows, audit quality and ownership on earnings management: The Jordan case

2018 ◽  
Vol 15 (4-1) ◽  
pp. 222-230 ◽  
Author(s):  
Ahmed Mushref Salim Al-Omush ◽  
Ali Mohammad Al-Attar ◽  
Walid Muhammad Masadeh
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Financial Distress ◽  
Audit Quality ◽  
Listed Companies ◽  
Cash Flows ◽  
Fund Flows ◽  
Mixed Support ◽  
Cash Flow Statement ◽  
Statement Of Cash Flows

This paper primarily aims to identify and evaluate the effect of Free Cash Surplus flows, Audit Quality and the ownership on Earnings Management. The study shows that financial distress has a significant impact on earnings management for samples on the Jordanian listed companies during (2003-2016). The Cash Flow Statement provides information on the flow of cash in and out of the organization over a specific period. It shows how an organization spends its money (cash outflows) as well as the source of the money (cash inflows). The Cash Flow Statement – additionally alluded to as the statement of cash flows or fund flows, which is one of the financial statements that is often utilized in the measurement of an organization’s financial performance and overall wellbeing. The study also investigates the prevalence of both accrual and base earnings management for the empirical corporate finance which claims that the better corporate governance constraints between earnings management and the relation of high free-cash -flows firms the more will the increase will be at the income management and the earnings management. Although, the research has addressed the issues of earnings management and the real activities handling; this research paper put these two issues together. The analysis provides a mixed support when using different earnings management detection models. The findings of this study could serve as a guideline to a proper and understanding of earnings management to public listed companies, regulators, and various stakeholders

Cash Flows at Amazon.com

2012 ◽  
Vol 28 (2) ◽  
pp. 353-374 ◽  
Author(s):  
Richard A. Price III
Keyword(s):  
Cash Flow ◽  
Initial Public Offering ◽  
Direct Method ◽  
Financial Statements ◽  
Cash Flows ◽  
The Other ◽  
Cash Flow Statement ◽  
Public Offering ◽  
A Direct Method ◽  
Over Time

ABSTRACT: This instructional case illustrates how Amazon.com's strategy has evolved over time and how these characteristics are reflected in the financial statements. A particular emphasis is placed on the cash flow statement. Students evaluate the cash flow statement and examine its articulation with the other financial statements. Students create a direct method cash flow statement in the year of Amazon.com's initial public offering using the information available in the financial statements.

scholarly journals Cash flow statement: Management tool or statutory requirement?

1994 ◽  
Vol 25 (1) ◽  
pp. 39-46
Author(s):  
I. J. Lambrechts
Keyword(s):  
Decision Making ◽  
Cash Flow ◽  
Capital Investment ◽  
Cash Flows ◽  
Management Tool ◽  
Final Conclusion ◽  
Financial Decision Making ◽  
General Acceptance ◽  
Financial Decision ◽  
Cash Flow Statement

The Cash Flow Statement (CFS) had been in use in South Africa since October 1988. It replaced the Statement of Sources and Application of Funds, which had been in use since 1973. In spite of the general acceptance of the benefits of the CFS and its superiority over the Statement of Sources and Application of Funds, there are certain inherent problems. These problems mainly relate to the format of the CFS and its ability to assist in forecasting the survival prospects of an enterprise. In this article the focus is firstly on the format of the CFS and it is compared with the requirement of other guidelines. A revised format is proposed. It also considers the usefulness of the CFS as a management tool in financial decision making. Areas of financial decision making which are considered, are financing, capital investment, dividend and pricing decisions. The final conclusion is that although the CFS could be standardized to a large extent, the same does not apply to the calculation of cash flows for financial decision making in different areas.

scholarly journals The usefulness of operating cash flow information: Does format matter?

2012 ◽  
Vol 10 (1) ◽  
pp. 44-52 ◽  
Author(s):  
Shadi Farshadfar
Keyword(s):  
Cash Flow ◽  
Indirect Method ◽  
Direct Method ◽  
Cash Flows ◽  
Indirect Methods ◽  
Flow Information ◽  
Operating Cash Flow ◽  
Future Cash Flows ◽  
Direct And Indirect Methods ◽  
Level Analysis

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.

scholarly journals Reaksi Investor Atas Relevansi Informasi Arus Kas Dan Laba Akrual pada Laporan Keuangan Perusahaan

2021 ◽  
Vol 21 (2) ◽  
pp. 575
Author(s):  
Muhammad Imam Sundarta ◽  
Azolla Degita Azis ◽  
Anggita Citra Dewi
Keyword(s):  
Stock Returns ◽  
Cash Flow ◽  
Stock Exchange ◽  
Secondary Data ◽  
Cash Flows ◽  
Financial Reports ◽  
Earnings Information ◽  
Income Statement ◽  
Analysis Technique ◽  
Cash Flow Statement

This study aims to determine whether cash flows and accrual earnings affect on stock returns that contained information about investors reaction in manufacturing industries on the Indonesia Stock Exchange from the 2013-2017 period. This research is a quantitative study using secondary data in the form of financial reports. The data analysis technique used is multiple regression analysis. The results of this study indicate that the cash flow statement has no effect on stock returns, while accrual earnings have a positive effect on stock returns. This finding can be one of the additional literature in the field of financial accounting because investors see the earnings information contained in the income statement compared to the cash flow statement that is reflected in stock returns.

CONTENT AND NON-TRADITIONAL WAYS OF USING CASH FLOW ANALYSIS OF NON-STATE CORPORATE STRUCTURES

2020 ◽  
Vol 13 (2) ◽  
pp. 43-50
Author(s):  
N.V. Bondarchuk ◽  
Keyword(s):  
Cash Flow ◽  
Financial Management ◽  
Direct Method ◽  
Flow Analysis ◽  
Cash Flows ◽  
Time Interval ◽  
Sources Of Information ◽  
Traditional Use ◽  
Global Pandemic ◽  
Potential Use

Non-state corporate structures, which are the most widespread subjects of Russian business, do not have direct state influence and significant support, and are the most severely affected by the global pandemic of 2019–2020, are increasingly facing a situation of their own insolvency.50 Экономические системы. 2020. № 2 Economic Systems. 2020. No. 2 In these conditions, financial managers of non-state corporate structures try to plan the distribution of their funds more clearly and devote significant influence to their analysis. The author defines the concept of cash flow analysis of non-state corporate structures corresponding to its modern content. The article presents the author's systematization of methods for analyzing cash flows used by non-governmental corporate structures on the basis of the following features: by time interval, by the sources of information used, by the content of the main methodological techniques, by the traditional direction of potential use. The time interval was used for retrospective, operational and forecast analysis of cash flows of non-state corporate structures. According to the sources of information used in the analysis of cash flows, it was detailed into external, internal and mixed. According to the content of methodological techniques, analytical procedures used in the analysis of cash flows in non-state corporate structures are a direct method of analyzing cash flows, an indirect method of analyzing cash flows and coefficient methods of analyzing cash flows. Based on the traditional nature of the potential use areas, we have identified traditional and non-traditional (relatively new) areas of use of cash flow analysis of non-state corporate structures that have become traditional in recent years. The article provides a brief description of direct, indirect and coefficient methods for analyzing cash flows of non-state corporate structures and describes the directions of their use. The main directions of their application are considered: determining the main types of proportions of cash receipts and outflows and distribution of cash flows by type of activity; calculating the net cash flow based on net profit and its adjustments; calculating the coefficients of sufficiency and efficiency of cash flows. The greatest attention is paid to the directions of non-traditional use of methods of cash flow analysis that solve certain tasks of financial management: assessing the feasibility of local financial solutions, determining the synchronicity and uniformity of inflows and outflows, eliminating short-and medium-term cash gaps, determining the level of tax costs, determining the ability of the organization to repay various types of obligations

Using Cash Flow Statement for Evaluating Financial Position and Creditworthiness of an Organization

2015 ◽  
Vol 3 (5) ◽  
pp. 58-63
Author(s):  
Комогорова ◽  
I. Komogorova ◽  
Аверина ◽  
Tatyana Averina ◽  
Михайлова ◽  
...  
Keyword(s):  
Cash Flow ◽  
Chemical Industry ◽  
Cash Flows ◽  
Financial Position ◽  
Cash Flow Statement ◽  
Positive Cash Flow

The paper discusses the use of absolute and relative indicators characterizing cash flows, as part of a technique to evaluate creditworthiness of companies. The authors present the calculations, made on the basis of 2014 financial statements of Novomoskovsk chemical industry enterprise «NAK “Azote”». The results of calculations illustrate the variability of findings concerning dynamics of the financial position of the organization, depending on whether the use of revenues or the amount of positive cash flow from current operations are taken as the basis for evaluating the rates of floating funds turnover.

scholarly journals Analisis Arus Kas (Studi Empiris Pada PT. Indosat Tbk)

2020 ◽  
Vol 11 (3) ◽  
pp. 237-252
Author(s):  
Risa Ratna Gumilang
Keyword(s):  
Comparative Analysis ◽  
Trend Analysis ◽  
Cash Flow ◽  
Component Analysis ◽  
Cash Flows ◽  
Ratio Analysis ◽  
Flow Ratio ◽  
Flow Conditions ◽  
Cash Flow Statement ◽  
Operating Activities

The cash flow statement is a report that shows the flow of cash or cash that is in the company. The cash statement consists of cash inflows such as proceeds from receipts or sales and cash outflows which consist of expenses such as payment of expenses and expenses. The purpose of this study was to determine the ability of PT. Indosat Tbk. in managing cash flow, especially in determining the projected investment made, based on the cash flow conditions of PT. Indosat Tbk in the period 2016-2018. The results of this study indicate that the comparative analysis of cash flow statements on total cash and cash equivalents, cash flow at the end of the period during the 2016-2018 period shows a percentage of -48.93%, 4.10%, -45.75%, for three consecutive years, and on Trend analysis is at PT. Indosat Tbk. shows the percentage figures of 51.07%, 104.10%, 54.25% for three consecutive years in the 2016-2018 period. Per component analysis shows that cash inflows and outflows are dominated by cash flows from operating activities with a tendency that cash inflows decrease while cash outflows increase. In a special cash flow ratio analysis shows that the cash flow adequacy ratio of PT. Indosat Tbk, shows a figure of 1.57 and a reinvestment ratio which shows a ratio of 25.65% which means that PT. Indosat Tbk is quite good at meeting the company's cash needs.

Sign in / Sign up

Export Citation Format

Share Document