Forecasting operating cash flow: evidence on the comparative predictive abilities of net income and operating cash flow from actual cash flow data.

Mid-Atlantic Journal of Business, June, 1993 by McBeth, Kevin H.

Rsearch was conducted on the prediction of cash flow based on past accounting earnings and cash flow using simple regression models. The goal was to evaluate the eficiency of net income statistics as basis for decision making involving accounting and financial reporting. Results showed that neither past account earning nor past cash flow were maximum predictors of cash flows. However, cash flow in itself was seen as a major aid in decision making.

INTRODUCTION

During the 1980s, accounting researchers expressed a renewed interest in information about cash flows. One aspect of that interest ...