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The purpose of this paper is to examine the relative predictive ability of earnings, cash flow from operations as reported in the cash flow statement, and two traditional measures of cash flows (i.e. earnings plus depreciation and amortisation expense, and working capital from operations) in forecasting future cash flows for Australian companies. Further, an empirical investigation of the extent to which firm size, as a contextual factor, influences the predictability of earnings and cash flow from operations is presented.

The authors' sample includes 323 companies listed on the Australian Stock Exchange between 1992 and 2004 (3,512 firm‐years). They employ the ordinary least squares and fixed‐effects approaches to estimate their regression models. To evaluate the forecasting performance of the regression models, both within‐sample and out‐of‐sample forecasting tests are employed.

The authors provide evidence that reported cash flow from operations has more power in predicting future cash flows than earnings and traditional cash flow measures. Further, the predictability of both earnings and cash flow from operations significantly increases with firm size. However, the superiority of cash flow from operations to earnings in predicting future cash flows is robust across small, medium and large firms.

The authors' results, in terms of firm size, imply that the users of accounting information should be cautious in assessing the utility of earnings and cash flow measures in forecasting future cash flows as firm size decreases.

To examine, determine, investigate and compare the extent to which enterprises in Greece and Cyprus use the theoretical framework to evaluate investments which are the discouraging factors concerning the use of this framework with particular emphasis to investigate the type, size and percentage of total capital expenditures detailed cash flow estimates; cash flow estimation practices and forecasting errors experience in the businesses in Greece and Cyprus.

The investigation was conducted by the distribution of a questionnaire to adequate number of small sized companies of Greece and Cyprus. The study was based on a questionnaire that was promoted to 800 firms in Greece and 120 in Cyprus.

The results of our survey have indicated the perceived important of some financial, marketing, and production factors on the cash flow forecasting process, as borrowing and repayment of funds, sales forecast, and operating expenses. The results of our study have indicated that the majority of forecasting methods used to generate cash flow estimates is management's subjective estimates and that the majority of the Greek firms adjust capital expenditure cash flow for inflation.

This study could potentially stimulate further research on cash flow forecasting practices of firms in other countries, such as Italy, France, and other Mediterranean countries, in order to compare the results.

This study provides evidence on the forecasting practices of small and medium-sized companies of Mediterranean companies.

This study aims to provide insights into US and Australian analysts' views regarding the relative importance of disclosing the direct method (DM) or indirect method (IM) statement of cash flows and forecasting firm performance.

Evidence is collected from responses to 104 surveys and 52 interviews completed by US and Australian analysts from 2017 to 2022. The survey and interview questions are developed with reference to the literature.

US and Australian analysts believe that the DM format provides incremental benefits compared to the IM for (1) confirming the reliability of earnings; (2) improving earnings confidence; (3) more accurate ex ante forecasts of operating cash flow and earnings; and (4) identifying opportunistic accruals manipulation. Analysts view that DM disclosure can lower firm-level cost of equity, although US interviewees more uniformly expect lower costs of equity under DM disclosure when firms yield low earnings quality. DM disclosure is also more important during unstable economic periods, as proxied by COVID-19.

Limited research currently exists regarding disclosure of the DM or IM and its impact on analysts' forecasting accuracy, earnings quality, economic uncertainty and cost of equity. Previous research has relied on archival research to examine differences between the DM and IM methods and are limited by data availability. Our findings are particularly relevant to the US market with few US firms reporting the DM format.

The purpose of this study is to examine the usefulness of pre‐production cash expenditure forecasts issued by Australian mining explorers in their quarterly cash‐flow reports.

Usefulness is determined by examining compliance and the reliability of forecasts (accuracy and bias) for a sample of 1,760 forecasts issued by 481 explorers in 2005/2006. The cross‐sectional variation in reliability is examined using regression analysis.

The findings reveal a high level of compliance but significant inaccuracies (median forecast error of around 50 percent of actual expenditure for exploration and evaluation expenditure and 85 percent for development expenditure), and some evidence of forecast bias. Forecast inaccuracy is more prevalent in firms that have poorer performance, greater financial slack, greater cash‐flow volatility, no financial leverage, and for firms that are smaller, in the pre‐development stage, and in the mineral (non‐oil and gas) sub‐industry.

The analysis of forecast usefulness is confined to compliance and reliability. Further research could consider the value‐relevance and predictive ability of these forecasts.

The findings question the usefulness of mandatory forecasting by showing that the information role of forecasts in capital markets is impaired when firms have little discretion over the forecast decision, timing and specificity.

This is the first study to examine mandatory cash expenditure forecasts and makes a significant contribution to the small literature on mandatory financial forecasts.

Construction projects are well known for their complexity and ambiguity. These projects carry out higher risk than traditional ones because they entail high capital outlays and intricate site conditions. Poor financial management of these projects may lead to bankruptcy; therefore, effective cash flow management is essential. Although the peculiar characteristics of construction projects, the accuracy of cash flow forecasting has been a long lasting problem. The paper aims to discuss these issues.

Many unforeseen factors affect the cash flow forecasting of construction projects. Therefore, the objective of the presented research in this paper is to examine the impact of these factors on contractor's cash flow. A model has been established by integrating analytic hierarchy process and simulation to examine the impact of various factors on cash flow. Data on the selected factors have been collected through questionnaires from various agencies in North America and China.

Results show that the most significant factors are: change of progress payment, payment duration, financial position of the contractor, project delays, and poor planning. It also shows that the effect of cash inflow factors varied approximately from 9.7 to 16.3 percent with a mean value of 12.4 percent.

The implementation of the developed models are limited to few case study projects in testing the models. However, the developed models and framework are sound for future improvement. They are considered as a major step toward a broader cash flow planning.

The developed methodology and models play essential roles in decision-making process.

The developed model is expected to help contractors realistically forecast project cash flow under uncertainty. This may lead to more dependable and professional cash flow management, which might substantially reduce failures in construction business.

The purpose of this paper is to identify and assess the extent of occurrence and impact of risk factors responsible for the variation between the forecast and actual construction cash flow.

The study was conducted through a structured questionnaire administered to UK contracting organizations. Adopting a project‐by‐project approach, respondents were asked to provide opinions on the extent of occurrence of some identified risk factors and their impacts on cash flow forecast. Respondents were split into three groups of small, medium and large contracting firms based on their annual turnover so as to be able to investigate statistical differences of opinions between the groups. Statistical analyses were carried out using mean response analysis and univariate analysis of variance (ANOVA) in order to determine significant risk factors and also to investigate differences of opinions between respondents' groupings.

The research identified 11 significant risk factors out of 26 research risk variables. These significant risk variables can be grouped under three generic factors of “changes in the design or specification”, “project complexity” and “natural inhibition”. The significant risk variables are those ranking high in “extent of occurrence” and with critical impacts on cash flow forecast. The research further showed that there is no statistically significant difference in the opinions of different categories of contractors regarding the extent of risk occurrence and impacts on cash flow forecast.

The research showed that the order of extent of risk occurrence is different from the order of impact in case of occurrence. This suggests that further work needs to be done to measure the impact more objectively on a ratio scale so as to provide an avenue for a more quantitative measure of risk impacts on cash flow forecast. This objective is the next focus of this study.

Based on the finding, it is evident that the knowledge of the identified significant risk factors provides invaluable information to the construction contractor as regards what risk variables to focus attention on in cash flow forecasting.

The paper makes an original contribution of exploring the extent of risk occurrence and its impact on construction cash flow forecast from an objective point of view rather that the usual subjective point of view. The epistemic nature of the investigation makes the finding of practical value to the construction contractor in cash flow forecasting.

Two stylized facts emerge from cash flow literature. One explores the link between free cash flow (FCF) to firm value (Jensen, 1986) and establishes that FCF increases firm value. The other posits FCF may be value decreasing as firms tend to over invest when there is high level of FCF (Richardson, 2006). Two camps have opposing views yet together they establish that FCF is value relevant. If FCF or cash flow, in general, is value relevant then managers will be motivated to present forecasts to investors. The paper aims to discuss these issues.

The authors hand collect data from each firm’s press releases and earnings announcements and perform an event study around this date to see how firm forecast and disclosure policies affect firm value.

The analysis demonstrates that disclosures and forecasts do have significantly positive relation with tech firms suggesting that firms in the technology industries are more forthcoming with cash flow disclosures and forecasts in their earnings announcements. The authors further show that these disclosures and forecasts negatively affect the firm value of tech firms.

This paper contributes to the literature that there is empirical evidence that cash flow disclosures and forecasts matter to the value of the firm. Further, it posits that unlike understanding the existing views as opposing each other, may be the authors will be better served if they view both of them as right depending on the optimality of forecasts. The future efforts will be directed toward exploring the optimality of cash flow disclosures.

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

The purpose of this paper is to examine whether analysts’ cash flow forecasts improve the profitability of their stock recommendations and whether the positive effect of cash flow forecasts on analysts’ stock recommendation performance varies with firms’ earnings quality.

To test the authors’ predictions, they identify a sample of 161,673 stock recommendations with contemporaneous earnings forecasts and/or cash flow forecasts and regress market-adjusted stock returns on a binary variable that proxies for the issuance of cash flow forecasts while controlling for contemporaneous earnings forecast accuracy, earnings quality, analysts’ forecast experience and capability and certain firm characteristics. The authors’ test results are robust to alternative measures of recommendation profitability, earnings quality and the use of recommendation revisions instead of recommendation levels.

The authors find that when analysts issue cash flow forecasts concurrently with earnings forecasts, their stock recommendations lead to higher profitability than when they only issue earnings forecasts, after controlling for analysts’ forecast capability. Moreover, the authors document that the contemporaneous positive relationship between cash flow forecasts and recommendations profitability is stronger for firms with low earnings quality than for firms with high earnings quality. The findings suggest that cash flow forecasts issued by analysts in response to market demand likely play a more important role in firm valuation than cash flow forecasts issued by analysts mainly because of supply-side considerations.

Future research could build on these findings to conduct further investigation on the alternative incentives for analysts’ forecasts of sales growth and long-term growth rates.

These findings may also help investors to better assess the quality of analysts’ research outputs and to identify superior stock recommendations.

This study provides insight into the role of cash flow forecasts in firm valuation and adds fresh evidence to the debate on the usefulness of cash flow forecasts. It extends the stream of research on the characteristics of analyst forecasts and increases our knowledge about the role of analysts in the financial market.

The purpose of this paper is to investigate the effect of non-articulation on analyst earnings forecast quality. The authors look for evidence on the relationship between non-articulation and analyst earnings forecast properties: forecast inaccuracy, forecast dispersion and forecast bias.

The empirical tests are primarily based analyst earnings and cash flow forecasts covered by Institutional Broker Estimate System and financial statement information obtained from Compustat North America database.

The authors hypothesize and find that non-articulation is positively related to analyst forecast dispersion, forecast accuracy and forecast bias for one-year ahead of earnings. The effects of non-articulation on analyst earnings forecast inaccuracy and bias are neutralized when the analyst issues a cash flow forecast and when such forecast provides accurate information regarding the forecasted firm’s operating cash flow. On the other hand, cash flow forecast issuance alone does not mitigate the negative influence of non-articulation.

The sample selection procedure limits the generalizability of the findings.

The findings confirm CFA Institute and prior research asserting that non-articulation deteriorates the quality of earnings forecasts by financial statement users (more specifically, the financial analysts). The authors add to the literature by documenting that accurate cash flow forecasts help analysts mitigate the negative influence of non-articulation on earnings forecast quality.

It remains an empirical question whether non-articulation between the balance sheet and the statement of cash flows has an effect on financial statement users’ ability to assimilate financial information. The paper highlights the detrimental effect of non-articulation by documenting the relationship between the non-articulation and the quality of earnings expectation.