The accruals and cash flows in the prediction of future cash flows : Evidence from listed companies on Ho Chi Minh stock exchange (HOSE)

Abstract

Cash flows is one of the most important information for investors to evaluate firm‘s performance. Therefore, it is essential to have an accurate view about cash flow predictions. The purpose of study is to clarify predictive ability of cash flows and accrual components in prediction of future cash flows of listed company in Ho Chi Minh from 2010 to 2014. The study conducts the empirical analyses by employing fixed effect models. The findings is that combining accrual components into cash flow models provide a stronger predictive power than single models. Thus, in this context, deeper understanding of the use of accrual components and cash flows model may provide a predictive tools to investors to predict future cash flow and make investment decisions more accurately.