scholarly journals The Relative Ability of Earnings and Cash Flow from Operations in Predicting Future Cash Flows: Evidence from India

2015 ◽  
Vol 5 (2) ◽  
pp. 178 ◽  
Author(s):  
Mwila Joseph Mulenga
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Cash Flows ◽  
Least Square ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Financial Status ◽  
Ordinary Least Square ◽  
Future Cash Flow ◽  
Least Square Approach

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.

scholarly journals Relative Ability of Earnings Data and Cash Flow in Predicting Future Cash Flows

2013 ◽  
Vol 3 (1) ◽  
pp. 214 ◽  
Author(s):  
Nasrollah Takhtaei ◽  
Hassan Karimi
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Accounting Standards ◽  
Cash Flows ◽  
Financial Accounting ◽  
Company Size ◽  
Financial Accounting Standards Board ◽  
Working Capital ◽  
Relative Ability ◽  
Future Cash Flows

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.

scholarly journals The Influence of Future Cash Flow Predictions on Profits in Companies Listed on the Indonesia Stock Exchange

2021 ◽  
pp. 026-033
Author(s):  
Titik Purwanti
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Cash Flows ◽  
Net Income ◽  
Purposive Sampling ◽  
Future Cash Flow ◽  
Operating Profit ◽  
Food And Beverage ◽  
Future Cash Flows

This research was conducted to determine the effect of future cash flow predictions on profits (gross profit, operating profit, and net income) in food and beverage companies listed on the Indonesia Stock Exchange. The method used in this research used purposive sampling with a population of food and beverage companies listed on the Indonesia Stock Exchange for the period 2016-2018. The samples in this research were 19 companies. The results obtained indicate that the operating profit variable has a partial effect on future cash flows, while the net income variable and the gross profit variable do not partially affect future cash flows. Simultaneously, gross profit, operating profit and net income have an effect on future cash flows.

scholarly journals Foreign Monitoring and Predictability of Future Cash Flow

2019 ◽  
Vol 11 (18) ◽  
pp. 4832
Author(s):  
Jaehong Lee ◽  
Eunsoo Kim
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Predictive Ability ◽  
Financial Statements ◽  
Cash Flows ◽  
Foreign Investors ◽  
Future Cash Flow ◽  
Flow Components ◽  
Future Cash Flows

A company’s sustainability is generally determined by whether it is able to create a positive long-term cash flow. This paper investigates whether the predictive ability of cash flows and earnings in forecasting future cash flows differs depending on the foreign investors’ ownership. Based on firms listed in the Korea Stock Exchange market from 2000 to 2017, we find that earnings and cash flow components of financial statements enhance the predictability of future cash flow in the Korean stock market. Conversely, foreign investors showed a tendency to decide on investments based on operating cash flow instead of earnings when predicting future cash flow. These findings indicate that reliability towards earnings may fall since foreign investors’ concerns are on the prospects of earnings management. These results were strengthened by the addition of several more analyses including cluster analyses, consideration of information asymmetry and the chaebol governance.

scholarly journals Ownership Structure and Cash Flows As Determinants of Corporate Dividend Policy in Pakistan

2010 ◽  
Vol 3 (3) ◽  
pp. 210 ◽  
Author(s):  
Talat Afza ◽  
Hammad Hassan Mirza
Keyword(s):  
Cash Flow ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Cash Flows ◽  
Least Square ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity ◽  
Operating Cash Flow ◽  
The Impact ◽  
Individual Ownership

Dividend Policy is among the widely addressed topics in modern financial literature. The inconclusiveness of the theories on importance of dividend in determining firm’s value has made it one of the most debatable topics for the researchers (see for example, Ramcharan, 2001; Frankfurter et. al 2002; Al-Malkawi, 2007). The present study investigates the impact of firm specific characteristics on corporate dividend behavior in emerging economy of Pakistan. Three years data (2005-2007) of 100 companies listed at Karachi Stock Exchange (KSE) has been analyzed using Ordinary Least Square (OLS) regression. The results show that managerial and individual ownership, cash flow sensitivity, size and leverage are negatively whereas, operating cash-flow and profitability are positively related to cash dividend. Managerial ownership, individual ownership, operating cash flow and size are the most significant determinants of dividend behavior whereas, leverage and cash flow sensitivity do not contribute significantly in determining the level of corporate dividend payment in the firms studied in our sample. Estimated results are robust to alternative proxy of dividend behavior i.e. dividend intensity.

scholarly journals Interactions between free cash flow, debt policy and structure of governance: Three stage least square simultaneous model approach: evidence from the Tunisian stock exchange

2012 ◽  
Vol 9 (2) ◽  
pp. 21-40 ◽  
Author(s):  
Ben Moussa Fatma ◽  
Jameleddine Chichti
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Least Square ◽  
Agency Conflicts ◽  
Governance Mechanism ◽  
Free Cash Flows ◽  
Debt Policy ◽  
Simultaneous Model

This research tests the efficiency of the ownership structure and the debt policy as mechanism of resolution of agency conflicts between shareholders and managers due to the problem of overinvestment, in the limitation of the problem of the free cash flow, by estimating three stage least square simultaneous model and on the basis of a sample of 35 non-financial Tunisian listed companies selected for the period 1999–2008. Our results are in favour of the theory of free cash flows of Jensen (1986) that stipulates that the debt policy represents the principal governance mechanism that can limit the risk of free cash flow. However, the ownership concentration and managerial ownership increase the risk of the free cash flow.

scholarly journals The FASBs Concepts Statement On Cash Flows And Present Value

2011 ◽  
Vol 19 (4) ◽  
Author(s):  
Stanley Martens ◽  
Thomas Berry
Keyword(s):  
Cash Flow ◽  
Accounting Standards ◽  
Fair Value ◽  
Cash Flows ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Present Value ◽  
Numerical Examples ◽  
Flow Information

In February 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Concepts No. 7, Using Cash Flow Information and Present Value in Accounting Measurements.  In this document the FASB asserts without proof that a present value computation along its lines will provide a good estimate of the fair value of an asset or liability.  Using numerical examples provided by the FASB, we attempt to construct arguments in support of the FASB’s claim.  We find that such arguments require strong and not at all obvious assumptions about players in hypothetical markets.

scholarly journals PERAN PROFITABILITAS DALAM MEMODERASI PENGARUH FREE CASH FLOW TERHADAP KEBIJAKAN DIVIDEN DI INDONESIA

2019 ◽  
Author(s):  
Angga Dwi Putra ◽  
Irdha Yusra
Keyword(s):  
Cash Flow ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Least Square ◽  
Sample Collection ◽  
Moderating Variables ◽  
Ordinary Least Square ◽  
Negative Effect ◽  
Operational Activity

Basically, every company requires capital in order to finance their operational activity and to expand their business so capital becomes one of the important elements in a company. When the capital which is owned by the company is large the operational activity that can be conducted is large as well. This research is meant to test the influence of free cash flow on dividend policy with profitability as a moderating variable. The population is all companies which are listed in Indonesia Stock Exchange in 2013-2017 periods. The sample collection technique has been carried out by using purposive sampling method and based on the predetermined criteria, 26 companies have been selected as samples. The data of the financial statement of the companies has been obtained from the official website of IDX. The analytical method used is regression analysis with moderating variables using the SPSS application. Preliminary tests were carried out namely testing the classical assumptions to assess whether in an ordinary least square linear regression model there is a problem of classical assumptions, and testing to see the effect of moderation in influencing the relationship between independent variables and the dependent variable. The results of this observation state that free cash flow has a negative effect on dividend policy, free cash flow has a positive effect on dividend policy with profitability as a moderating variable

scholarly journals Cash Flow Accounting: is It Time For Increased Disclosures?

2011 ◽  
Vol 12 (1) ◽  
pp. 47 ◽  
Author(s):  
John E. McEnroe
Keyword(s):  
Cash Flow ◽  
Final Section ◽  
The United States ◽  
Cash Flows ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Security Analysts ◽  
Flow Information ◽  
Operating Cash Flow ◽  
Free Cash Flows

Cash flow reporting has attracted increased attention in the United States, especially in the past decade. However, despite the use of per share cash flow information by security analysts, the Financial Accounting Standards Board (FASB) has prohibited its disclosure. This article provides a historical perspective of cash flow accounting in the U.S., as well as a discussion of cash flow advocates. The final section presents arguments for increased disclosures in the area of cash flows, including operating cash flow on a per share basis and a schedule of free cash flows.

scholarly journals A Research Note On The Issue Of Non-Articulation And The Method Used To Calculate Net Operating Cash Flow

2011 ◽  
Vol 25 (1) ◽  
Author(s):  
Terry J. Ward ◽  
Jon Woodroof ◽  
Benjamin P. Foster
Keyword(s):  
Cash Flow ◽  
Indirect Method ◽  
Direct Method ◽  
Accounting Standards ◽  
Cash Flows ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Font Size ◽  
Operating Cash Flow ◽  
Statement Of Cash Flows

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Using a proxy for nonarticulation, prior researchers found evidence that many companies using the indirect method of reporting net cash flow from operations have a significant level of nonarticulation.<span style="mso-spacerun: yes;">&nbsp; </span>The purpose of this study is to determine if companies using the direct method of reporting net cash flow from operations experience significantly lower levels of nonarticulation than companies that use the indirect method of reporting net cash flow from operations.<span style="mso-spacerun: yes;">&nbsp; </span>Results show that companies using the direct method have significantly less nonarticulation than companies using the indirect method.<span style="mso-spacerun: yes;">&nbsp; </span>This finding suggests that the Financial Accounting Standards Board (FASB) should consider requiring companies to use the direct method of preparing the Statement of Cash Flows.</span></span></p>

scholarly journals Analisis pengaruh leverage terhadap nilai perusahaan dengan kepemilikan manajerial dan arus kas bebas sebagai variabel pemoderasi

2017 ◽  
Vol 22 (1) ◽  
Author(s):  
Linawaty Linawaty ◽  
Agustin Ekadjaja
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Stock Exchange ◽  
Secondary Data ◽  
Least Square Method ◽  
Free Cash Flow ◽  
Least Square ◽  
Ordinary Least Square ◽  
Management Ownership ◽  
The Impact

The purpose of this study is to examine whether or not the effect of leverage on firm value with management ownership and free cash flow as moderating variabel practice of manufacture firms listed in Indonesian Stock Exchange for period 2012-2014. Thirty five sample are selected by purposive sampling and used ordinary least square method to analysis. This study used secondary data such as firm financial statement that published during the observation year. Dependent variabel in this study is firm value practice of real estate firms listed in Indonesian Stock Exchange, while the independent variabels are leverage, management ownership, and free cash flow. The result shows that the impact of leverage is significant on firm value; Free Cash Flow is significant moderating leverage on firm, Management Ownership is not significant moderating leverage on firm value

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