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Title FORECASTING FUTURE CASH FLOWS BY USING EARNINGS, SHORT TERM AND LONG TERM DISAGGREGATED ACCRUALS

Author(s) KULSOOM HIDAYAT

Abstract ABSTRACT Title: FORECASTING FUTURE CASH FLOWS BY USING EARNINGS, SHORT TERM AND LONG TERM DISAGGREGATED ACCRUALS This research investigated the predictive ability of earning along with short term accruals and long term accruals to forecast future cash flows by using model developed by Barth in 2001. The main aim of this research is to forecast the future cash flow by using earnings and disaggregated accruals both short and term accruals and to find out that which one of them is the best predictor of future cash flow. Four prediction models are used for the forecasting of future cash flow by using the regression. In order to achieve this aim, data of 50 firms listed on Pakistan stock exchange PSX for the period of January 2008 to December 2017 is utilized as a sample. The insight of this study is that current earning alone is not a better forecaster of future cash flows. The predictive ability of current earning is increased when it is used in a model along with accruals. The findings also suggest that the predictive capability of long term accruals is better than short term accruals. Two models Fixed effect and random effect, is used for the panel data, are tested. After that other tests are organized to find out that which model is suitable for the analysis. Three independent variables (Earnings, Short Term Accruals and Long Term Accruals) and one dependent variable (Cash Flows) are used in the study. Keywords: Future Cash Flows, Non-financial companies, short term accruals, earnings, long term accruals.

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Management Sciences

Language English

Publication Date 2018-01-17

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