The Informational Importance Provided by the Cash Flow Statement Follows International Standards in Assessing Financial Liquidity

Tariq Jassim Mohammad ()

American Journal of Accounting, 2024, vol. 6, issue 3, 19 - 32

Abstract: Purpose: The research aims to emphasize the informational significance of the statement of cash flows by international accounting standards in assessing the financial liquidity of selected banks for the period (2019–2023). The study employs financial ratios derived from the cash flow statement to analyze and evaluate the financial liquidity of these banks. Materials and Methods: The research adopts a quantitative analytical approach, relying on financial ratios extracted from the statement of cash flows. These ratios are used to assess the financial liquidity of the banks in the research sample. The analysis focuses on short-term and long-term financial obligations, ensuring a comprehensive evaluation of monetary liquidity. Findings: The research concludes that the statement of cash flows provides essential information for assessing financial liquidity. It demonstrates that this statement is valuable for investors, creditors, lenders, and other stakeholders in evaluating banks' ability to meet their short-term and long-term financial obligations. Additionally, the findings confirm the hypothesis that the cash flow statement is fundamental in providing critical insights for financial liquidity assessment. Implications to Theory, Practice and Policy: The research recommends enhancing awareness among financial statement recipients regarding the informational importance of the cash flow statement. It highlights the statement's role in predicting future cash flows and its effectiveness in assessing financial liquidity. The study suggests promoting educational initiatives and tools to help stakeholders fully utilize the insights provided by the cash flow statement.

Keywords: Statement; Cash Flows; Accounting Standards No. 7; Financial Liquidity; M41; G32; E58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bfy:oajacc:v:6:y:2024:i:3:p:19-32:id:2544

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