Open AccessDoes Industry Affect the Cash Flow Statement Presentation Format?
Author(s) -
Xiaojie Christine Sun,
Yang Xu,
Lijuan Zhao
Publication year - 2018
Publication title -
accounting and finance research
Language(s) - English
Resource type - Journals
eISSN - 1927-5994
pISSN - 1927-5986
DOI - 10.5430/afr.v7n3p1
Subject(s) - cash flow statement , cash flow , business , cash flow forecasting , operating cash flow , payment , cash , presentation (obstetrics) , statement (logic) , affect (linguistics) , cash management , monetary economics , actuarial science , finance , accounting , economics , medicine , linguistics , philosophy , political science , law , radiology
The statement of cash flows of a business can be presented by using either the direct method (DM) or the indirect method (IM). In United States, only a small portion of businesses use the DM. Compared to the IM, the DM has been shown to provide incremental information in predicting future cash flows. Furthermore, the DM can also improve the ability to compare the individual component of cash receipts and cash payments among similar companies over a period of time. This study finds that firms choosing the DM tend to be in high tech industries.