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Paper Information

Journal:   MANAGEMENT ACCOUNTING   FALL 2010 , Volume 3 , Number 6; Page(s) 63 To 76.
 
Paper: 

THE INVESTIGATION OF THE ABILITY OF CURRENT ACCOUNTING DATA IN PREDICTING FUTURE CASH FLOWS

 
 
Author(s):  AMINI PEYMAN, MOHAMMADI KAMRAN, AFLATOONI ABBAS
 
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Abstract: 

Cash flow prediction is an important purposes of financial reporting, because provide important information for internal and external users. Most researchers believe that accounting data can be used to predicting future cash flows.
In this paper we Study the ability of earning, cash flows, and accruals to predicting future cash flows. In order to study the predictive ability of used models, Pearson correlation, and regression pooling data has been used.
The results show that current cash flow alone has superiority in predicting future cash flow than current earnings alone and Also, disaggregation of earnings into cash flow and accruals as well as adding accrual components to the model which already contains accruals data implicitly in the form of earnings generate superior explanatory power with regard to future cash flow.
Finally, adding short term accruals (change in accounts receivable, change in accounts payable and change in inventory) in compare with long term accruals (depreciation and amortization) to the earnings-based model, lead to increase higher the ability of predictive future cash flows.

 
Keyword(s): EARNING, CASH FLOWS, ACCRUALS, FUTURE CASH FLOWS
 
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