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THE ABILITY OF THE DIRECT METHOD OF OPERATING CASH FLOW AS A PREDICTOR OF FUTURE OPERATING CASH FLOW, PROFIT AND DIVIDEND

THE ABILITY OF THE DIRECT METHOD OF OPERATING CASH FLOW AS A PREDICTOR OF FUTURE OPERATING CASH FLOW, PROFIT AND DIVIDEND

Title: THE ABILITY OF OPERATING CASH FLOW USING THE DIRECT METHOD AS A PREDICTOR OF OPERATING CASH FLOW, PROFIT AND FUTURE DIVIDENDS

Authors: ZUHROTUL ISNAINI

Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya

Publisher: Universitas Airlangga

Abstract

This study examines the ability of the direct method of operating cash flow as a predictor of future operating cash flow, earnings, and dividends. FASB (1987) and AASB 1026 (1992) believe that the direct method of operating cash flow has a more accurate ability as a predictor of future operating cash flow. Research conducted by Ou and Penman (1992), Finger (1994), Krishnan & Largay (2000), Kusuma H. ​​(2001), and Suardhika (2003) shows that the direct method of cash flow has predictive ability as a predictor of future operating cash flow, earnings, and dividends. Various previous studies serve as a reference for the hypothesis in this study.

The type of research used to prove the proposed hypothesis is quantitative research with the scope of the research being ', industrial companies listed on the Jakarta Stock Exchange during the period 2000-2003 as the prediction year. This research was conducted since 2000, because since 2000 the capital market authority (Bapepam) requires all listed companies to use the direct method of cash flow: The purposive sampling method was used to select those to be used in this test. Data collection was carried out using the secondary data documentation method from unqualified opinion financial reports, especially cash flow reports, as well as footnotes on industrial companies. Then the collected data was analyzed using SPSS series 11 with regression techniques.

The results of testing the hypothesis confirm that operating cash flow has been proven to have significant ability as a predictor of future operating cash flow, profits and dividends.

Keywords: Future Operation Cash Flow, Earnings, Dividend and Cash Flow Statement in Direct Operation Method

Sources: http://repository.unair.ac.id/36101/

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