Embracing Cash Flow Ratios for predicting financial future Dissertation

Embracing Cash Flow Ratios for predicting fiscal future - Dissertation ExampleAcknowledgments I wish to forward my appreciation for the support, guidance, comments to my respected Supervisor, Supervisors name here, for his/her dedicated supervision towards this piece of work. Further, I am greatly thankful to the numerous colleagues and friends whose work greatly facilitate me to comprehend the main prow of this research work. Financial ratios have failed to accurately predict the financial position of companies. Despite their widespread practise in the financial world, the constant occurrence of business bankruptcies seriously highlights the inherent weaknesses of these ratios. Beyond any doubt, cod to these shortcomings in these ratios, predicting successful or failed businesses have become a necessity this necessity can be properly filled up if the use of currency flow ratios is adopted as these ratios do non take into account the subjective measures and depreciation. The f undamental difference offered by the cash flow ratios emanates from their cash ground procedure rather than accrual basis. Cash flows have become a significant part towards action and position evaluation of a companys yearly executing. And, in this regard, Rose et al., (2007) contend that the cash flow randomness facilitates to the users of financial statements in a way to receive the related financial information relating to the source and use of particularly the entire financial resources over a particular time period. And that financial information is classified into the different segments of cash flow ratios statement much(prenominal) as operating, investing and financial activities (Macve, 1997). However, cash flow ratios have not been in use as the other financial ratios such as liquidity, investors, and so on. Thereby, technical and investment fund managers and analysts have been using these measures to determine and evaluate performance and position of companies. Despit e their wide spread use for the purpose of evaluation, these financial ratios have been unable to by the bye identify the possible presence of shortcomings in the strategic and operational policies of the companies. In this regard, Albrecht (2003) argues that these forms of ratios are inherently impact by the fundamental weaknesses of accrual based accounting. Purpose of the study (problems with other ratios)