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Revamping the cash flow statement

B.W. Steyn (Department of Accountancy, University of Stellenbosch)
W.D. Hamman (Graduate School of Business, University of Stellenbosch)

Meditari Accountancy Research

ISSN: 1022-2529

Article publication date: 1 April 2003

743

Abstract

In this article, modifications are suggested for the current format of the cash flow statement, which is prescribed by AC 118, in order to address ambiguities and improve comparability. This redefinition of activities, together with the alteration of the layout, leads to a better explanation of the cash‐generating function of an enterprise. The authors argue that the separation of the cash flow for the maintenance of the existing resource base and the cash flow for the expansion thereof, is essential information in a model for the prediction of the future cash flow generation of a company. The resultant increase in the accessibility, reliability and utility of cash flow reporting should enhance users’ economic decision making and liberalise financial information. The modifications proposed in the article can therefore assist standard setters to improve financial reporting.

Keywords

Citation

Steyn, B.W. and Hamman, W.D. (2003), "Revamping the cash flow statement", Meditari Accountancy Research, Vol. 11 No. 1, pp. 181-198. https://doi.org/10.1108/10222529200300012

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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