Is Direct Method Cash Flow Reporting Better at Predicting Future Performance?

Authors

Knowledge@SMU

Publication Type

Journal Article

Publication Date

11-2007

Abstract

“Cash is king” goes the saying. Even companies enjoying brisk business have been known to fail because of unhealthy cash flows. The accounting profession is split over the benefits of the direct method (DM) versus the indirect method (IM) of preparing cash flow reports. In a study of over 100 US-based companies which used direct cash flow statements, Singapore Management University accounting professor Yoonseok Zang shows conclusively that the direct method does better at predicting future performance and earnings. --------------------------------------------------------------------------------

Disciplines

Accounting | Business | Finance and Financial Management

Copyright Owner and Holder

Copyright © Singapore Management University 2012

Licece/Creative Commons Licence

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Article ID

1104

Subject(s)

Finance and Accounting

Citation

Knowledge@SMU. Is Direct Method Cash Flow Reporting Better at Predicting Future Performance?. (2007).
Available at: https://ink.library.smu.edu.sg/ksmu/59