Author: Andreas G. CharitouPublisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 231
Book Description
The Information Content of Accrual and Cash Flow Measures
Author: Andreas G. CharitouPublisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 231
Book Description
The usefulness of accounting measures in predicting future cash flow
Author: Nikolay DraganovPublisher: GRIN Verlag
ISBN: 3346463400
Category : Business & Economics
Languages : en
Pages : 62
Book Description
Master's Thesis from the year 2021 in the subject Business economics - Accounting and Taxes, grade: 1,0, University of Cologne, language: English, abstract: The primary aim of this study is to empirically examine the relative ability of accounting earnings and cash flow to predict future cash flow. Moreover, the role of accruals in cash flow predictions is called into question. One of the major purposes of financial reporting consists in ensuring an informational basis that helps investors, creditors and other users of accounting data to overcome the uncertainty associated with the future cash flows of enterprises their financial activity relates to. At the same time, the accrual concept prevails in modern accounting, since it is theorized to mitigate the mismatching and timing problems of the unrefined cash ba-sis accounting. Hence, recognizing revenues and expenses in the period when they have occurred, and not when cash was received or paid out, should create a more relevant framework for decision making. The use of accrual accounting earnings as a summary measure of financial performance instead of the more primitive cash flows is therefore advocated by accounting standard setters. For instance, the Financial Accounting Stand-ard Board claims that: “Information about enterprise earnings and its components measured by accrual accounting generally provides a better indica-tion of enterprise performance than information about current cash receipts and pay-ments”. The FASB’s statement led to a rising discussion in the financial research on whether accounting earnings provide a more reliable picture of a company’s future operating cash flows than current operating cash flows themselves do. Hence, a major implication of the above quotation refers to the incremental power of accruals and its components in predicting future cash flows beyond the one contained into current operating cash flows. This debate represents a cornerstone in evaluating the information quality offered by the accrual accounting concept.
the nature and amount of information reflected in cash flows and accruals
Author: victor l. bernard and thomas l. stoberPublisher:
ISBN:
Category :
Languages : en
Pages : 56
Book Description
Using Cash Flow Information in Accounting Measurements
Author: Financial Accounting Standards BoardPublisher:
ISBN:
Category : Assets (Accounting)
Languages : en
Pages : 56
Book Description
The Information Content of Accrual and Cash Flow Based Performance Measures
Author: Thomas PlenborgPublisher:
ISBN: 9788759380697
Category :
Languages : en
Pages :
Book Description
The Information Content of Cash-flow Measures in Dividend Policy
Author: Robert P. CrumCash Flow Reporting (RLE Accounting)
Author: Thomas A. LeePublisher: Routledge
ISBN: 1317975677
Category : Business & Economics
Languages : en
Pages : 579
Book Description
This collection explores Kuhn’s 1970 perception of a scientific revolution in the form of a cyclical sequence of anomaly recognition; insecurity, alternative ideas, schools of thought and dominating practices. Cash flow reporting has become a dominant accounting practice which emerged from a developmental process of Kuhnian form. The text is constructed around the various stages identified by Kuhn and selected readings are categorised accordingly.
The Incremental Information Content of Accruals and Cash Flows After Controlling for Earnings
Author: Gordon Peter WilsonPublisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 114
Book Description
Accrual Accounting, Cash Accounting and the Estimation of Future Cash Flows
Author: Aliasghar MottaghiPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This study investigates the predictive ability of current and past cash flows with respect to the estimation of future cash flow, and compares this predictive ability with that of current and past earnings. Future cash flow is estimated in this study on the basis of a model hierarchy that initially incorporates aggregated predictors and then their disaggregated components, with the objective of improving on conventional research design with respect to the problematic issues surrounding missing values in source databases, extreme values in the sampled data and variability in fiscal year length. In determining whether the disaggregation of earnings into cash flow, accruals and their components adds to the predictive ability of cash flow, the present thesis also documents out-of-sample accuracy tests for the UK based on initial in-sample estimations, with accruals being computed using both the information in the Statement of Cash Flows and the information that may be derived from Balance Sheet changes. Using the information in the Statement of Cash Flows, the results of the in-sample estimation indicate that, whilst there is no notable difference between the ability of cash flow and aggregate earnings to predict future cash flow, the disaggregation of earnings into cash flow and accruals improves the prediction. The out-of-sample accuracy tests confirm the standard result that this disaggregated earnings model is a better predictor of future cash flow. In contrast, this thesis shows that, when using information in the Balance Sheet, by way of changes from one period to the next, the results of both the in-sample estimation and the out-of-sample accuracy tests show that disaggregated earnings is unable to outperform aggregate earnings in predicting future cash flow. Nevertheless, when the total accrual is further disaggregated into its deferral and accrual components, in-sample estimation reveals additional improvement in predictive ability, using each of the two sources of information to compute total accruals (the Statement of Cash Flows and Balance Sheet changes), although this is less evident with the out-of-sample tests. Whilst further analysis indicates that disaggregation is more informative when the firm size is large, the magnitude of accruals is low and the firm reports a positive CFO and EBIT, the thesis shows that the ability of the estimation models to predict future cash flow differs across industries in the UK, and that the findings are generally sensitive to the effect of database choice, the fiscal year length, and the identification and treatment of unrecorded data.
Author: Andreas A. Charitou