Value Relevance of K－IFRS Operating Profit and Loss: Comparison with the Profit and Loss Corresponding to Cash Generated from Operating Activities of the Statement of Cash Flows

2021 ◽  
Vol 36 (4) ◽  
pp. 77-94
Author(s):  
Youngdo Kwon ◽  
Sugyeong Park
Keyword(s):  
Value Relevance ◽  
Cash Flows ◽  
Operating Profit ◽  
Statement Of Cash Flows ◽  
Operating Activities

scholarly journals Finding an Easier Way to Explain the Statement of Cash Flows

2021 ◽  
Vol 11 (3) ◽  
pp. 25
Author(s):  
Seung Hwan Kim
Keyword(s):  
Indirect Method ◽  
Financial Statements ◽  
Cash Flows ◽  
Financial Accounting ◽  
The Other ◽  
Net Income ◽  
Public Companies ◽  
Difficult Time ◽  
Statement Of Cash Flows ◽  
Operating Activities

The statement of cash flows is one of the required financial statements of public companies, and thus is required of all accounting majors. After learning the other required financial statements in an introductory financial accounting course and, again, in the first intermediate accounting course, accounting majors learn how to prepare the statement of cash flows in the second or last intermediate accounting course. Most accounting majors find the statement of cash flows significantly more difficult to learn than any other financial statements. Especially, students find it most difficult to understand the indirect method of preparing the statement of cash flows. Preparing the statement of cash flows using the indirect method, students go through the most difficult time, specifically, doing the adjustments that are made to net income to reconcile to cash flows from operating activities.In this paper, presented is a different way to explain the principles of indirect method of preparing the statement of cash flows with a focus on the reconciliation of net income to cash flows from operating activities. Different from the explanations in the textbooks available in the market, the approach presented in the paper is preferred by all the students who were taught the statement of cash flows. Also, pointed out in the paper are a few things that students are easily confused of in learning the statement of cash flows.

scholarly journals Relevant Cash Flows Information for Engineering & Construction’ Companies Investors

2018 ◽  
Vol 7 (3.2) ◽  
pp. 322
Author(s):  
Yurii Pogorelov ◽  
Valentina Dubovaya ◽  
Anastasia Bilousova
Keyword(s):  
Direct Method ◽  
Open Data ◽  
Cash Flows ◽  
Global Business ◽  
Financial Reports ◽  
Construction Companies ◽  
Global Engineering ◽  
Rating Method ◽  
Statement Of Cash Flows ◽  
Operating Activities

Purpose of the article is to analyze and improve approaches of making financial reports about cash flows to provide relevant cash flows information for Engineering & Construction’ companies existing and potential investors. There were such research approaches used as analysis of financial reports, rating method and empirical analysis on open data. There is a fact found about non-compliance by Biggest Global Engineering & Construction’ companies of IAS 7 about reporting cash flows from operating activities using the direct method found. It was suggested to make all parts of statement of cash flows by direct method. It is grounded by topicality of such cash flows information for existing and potential investors, including making them modeling cash flows. It is recommended to expand using some indicators such as «Net Cash Flows from Operating Activities», «Net Cash Flows from Investing Activities», and «Net Cash Flows from Financing Activities» and «Cash Flows Receipts as the most objective one for characterizing economical activity of entities while making Global Business ratings. It is suggested to continue researches in direction of analyzing the best practical approaches to make report of Cash Flows from Operating, Investing & Financing Activities to generalize the best international experience.  

scholarly journals Is The Scaling Measure Used For Cash Flows Important In Predicting Financially Distressed Firms?

2011 ◽  
Vol 9 (4) ◽  
pp. 134 ◽  
Author(s):  
Terry J. Ward
Keyword(s):  
Cash Flow ◽  
Financial Distress ◽  
Predictive Ability ◽  
Cash Flows ◽  
Financial Distress Prediction ◽  
Distress Prediction ◽  
Distressed Firms ◽  
Financially Distressed ◽  
Statement Of Cash Flows ◽  
Operating Activities

This paper attempts to determine whether the measure used to scale the three net cash flows reported on a statement of cash flows affects binary financial distress prediction results. The results of this study suggest that the scaling measure used does affect the incremental predictive ability of each cash flow. Results indicate that tone should scale cash flow from operating activities by current assets, cash flow from investing activities by sales, and cash flow from operating activities by owners equity.

Analyzing the figures of consolidated statement of cash flows of the world's biggest publicly traded oil and gas corporations

2020 ◽  
Vol 19 (6) ◽  
pp. 1101-1120
Author(s):  
O.V. Shimko
Keyword(s):  
Public Sector ◽  
Cash Flow ◽  
Oil And Gas ◽  
Cash Flows ◽  
Annual Reports ◽  
Capital Expenditures ◽  
Publicly Traded ◽  
The Public ◽  
Statement Of Cash Flows ◽  
Oil And Gas Companies

Subject. The article investigates key figures disclosed in consolidated cash flow statements of 25 leading publicly traded oil and gas companies from 2006 to 2018. Objectives. The focus is on determining the current level of values of the main components of consolidated statement of cash flows prepared by leading publicly traded oil and gas companies, identifying key trends within the studied period and factors that led to any transformation. Methods. The study draws on methods of comparative and financial-economic analysis, as well as generalization of materials of consolidated cash flow statements. Results. The comprehensive analysis of annual reports of 25 oil and gas companies enabled to determine changes in the key figures and their relation in the structure of consolidated cash flow statements in the public sector of the industry. It also established main factors that contributed to the changes. Conclusions. In the period under study, I revealed an increase in cash from operating activities; established that capital expenditures in the public sector of the industry show an overall upward trend and depend on the level of oil prices. The analysis demonstrated that even integrated companies’ upstream segment prevail in the capital expenditures structure. The study also unveiled an increase in dividend payments, which, most of the time, exceeded free cash flows thus increasing the debt burden.

Predictive view of the value relevance of earnings in India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hajam Abid Bashir ◽  
Manish Bansal ◽  
Dilip Kumar
Keyword(s):  
Capital Investment ◽  
Stock Return ◽  
Value Relevance ◽  
Stock Exchange ◽  
Predictive Ability ◽  
Cash Flows ◽  
Data Set ◽  
Content Type ◽  
Uniform Sample ◽  
Reported Earnings

Purpose This study aims to examine the value relevance of earnings in terms of predicting the value variables such as cash flow, capital investment (CI), dividend and stock return under the Indian institutional settings. Design/methodology/approach The study used panel Granger causality tests to examine causality relationships among variables and panel data regression models to check the statistical associations between earnings and value variables. Findings Based on a data set of 7,280 Bombay Stock Exchange-listed firm-years spanning over ten years from March 2009 to March 2018, the results show higher sensitivity of earnings toward cash flows, CI, divided and stock return and vice-versa. Further, the findings deduced from the empirical results demonstrate that earnings are positively related to value variables. Overall, the results established that earnings are value-relevant and have predictive ability to forecast the value variables that facilitate investors in portfolio valuation. The results are consistent with the predictive view of the value relevance of earnings. Several robustness checks confirm these results. Originality/value This study brings new empirical evidence from a distinct capital market, India, and provides a new facet to the value relevance debate in terms of its prediction view. The study is among earlier attempts that jointly measure the ability of earnings in forecasting different value variables by taking a uniform sample of firms at the same period. Hence, the study provides a comprehensive view of the predictive ability of reported earnings.

scholarly journals The Preference of Direct or Indirect Methods in Preparing the Statement of Cash Flows in Decision Making: An Academic Perspective

2016 ◽  
Vol 8 (2) ◽  
pp. 206
Author(s):  
Abdullah, S. Hardan ◽  
Majed, A. Qabajeh ◽  
Aymen, M. Alshanti
Keyword(s):  
Decision Making ◽  
Indirect Method ◽  
Direct Method ◽  
Cash Flows ◽  
Decision Makers ◽  
Academic Rank ◽  
Indirect Methods ◽  
Statement Of Cash Flows ◽  
Qualitative Characteristics ◽  
Academic Sector

Two methods are used when reporting cash flows from operating activities: the direct method or the indirect method, both are acceptable from IAS with a preference of direct method. Thus, this paper examines which method of reporting the statement of cash flows provides useful information the decision makers rely on for decision making purposes. To achieve this aim, participants were selected from academic sector represented by universities professors. The study is based on the conceptual framework: qualitative characteristics of accounting information. To be useful, information must be relevant and represents faithfully what it claims to represent. In order to distinguish more useful financial information from those less useful, enhancing qualitative characteristics were examined. Results show that academic professors provide support for direct method of reporting cash flows over indirect method. The study sought to determine the effect of academic rank on these results. Evidence reveals that full and associate professors endorsed the preference of direct method more than assistant professors and lecturers. These results recommend the legislative bodies and entities to adopt the direct method in preparation the statement of cash flows.

Megascreens USA Inc.—A Foreign Operations Case

2007 ◽  
Vol 22 (4) ◽  
pp. 579-590 ◽  
Author(s):  
Charles A. Carslaw ◽  
S. E. C. Purvis
Keyword(s):  
Financial Reporting ◽  
Foreign Currency ◽  
Financial Statements ◽  
The United States ◽  
Cash Flows ◽  
Consolidated Financial Statements ◽  
Comprehensive Overview ◽  
Financial Reporting Standards ◽  
Foreign Operations ◽  
Statement Of Cash Flows

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.

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