An evaluation of user ratings of cash vs accrual based financial reports in Australia

Abstract

Outlines Australia’s adoption of the direct method of cash flow reporting and presents a survey of 83 loan officers and 76 financial analysts to assess its decision relevance compared with traditional financial statements for commercial loan and investment decisions. Finds both groups (but especially financial analysts) rate cash flow statements more highly across all decisions except performance evaluation; but notes some differences in their relative ratings of the profit and loss account and the balance sheet. Contrasts the findings with other research and recognizes the limitations of the study but suggests that it may provide support for enforcing the direct method of cash flow reporting in other countries, e.g. the USA.

Citation

Jones, S. (1998), "An evaluation of user ratings of cash vs accrual based financial reports in Australia", Managerial Finance, Vol. 24 No. 11, pp. 16-28. https://doi.org/10.1108/03074359810765688