The Effect of Cash Flows on Firm Performance: A Research on BISTİbrahim Kaya, Hakan Özçelik
In line with the development and change in the financial markets, the cash flow statement has become an important financial statement, and the strategic value of cash flow information for company managers and investors has increased. In this study; it is aimed to measure the effect of cash flow information on firm performance. Within the scope of the purpose, data of 57 companies operating in manufacturing and non-manufacturing sectors, excluding financial institutions, from BIST 100 companies covering the period of 2014 - 2019 were used. In the model developed in the study, cash flow statement data was used as the independent variable, while the return on assets ratio (ROA), return on equity ratio (ROE) and Tobin q ratio were selected as dependent variables. As a result of the study, it was determined that cash flows influence business performance. The statistically significant positive relationships between cash flows from operating activities and ROA, cash flows from financing activities and ROE, and dividend payments and Tobin’s q ratio with end-of-period cash balance were identified as the prominent results of the study.
Nakit Akışlarının Firma Performansı Üzerine Etkisi: BİST Üzerine Bir Araştırmaİbrahim Kaya, Hakan Özçelik
Finansal piyasalardaki gelişim ve değişimin paralelinde nakit akış tablosu önemli bir finansal tablo haline gelmiş, nakit akış bilgilerinin firma yöneticileri ve yatırımcılar için stratejik değeri artmıştır. Bu çalışmada; nakit akış bilgilerinin firma performansı üzerine olan etkisinin öçlümü amaçlanmıştır. Amaç kapsamında, 2014 - 2019 dönemini kapsayan BİST 100 şirketlerinden mali kuruluşlar hariç, imalat ve imalat dışı sektörde faaliyet gösteren 57 firmanın verileri kullanılmıştır. Çalışmada geliştirilen modelde, bağımsız değişken olarak nakit akış tablosu verileri kullanılırken, bağımlı değişken olarak performans değerleme oranlarından aktif karlılık oranı, özsermaye karlılık oranı ve Tobin q oranı seçilmiştir. Çalışma sonucunda, nakit akışlarının işletme performansını etkilediği tespit edilmiştir. ROA ile işletme faaliyetlerinden nakit akışları, ROE ile finansman faaliyetlerinden nakit akışları ve ödenen temettü bilgisi ve Tobin q ile dönem sonu nakit bilgisi arasındaki istatiksel anlamdaki pozitif yönlü ilişkiler, çalışmada ön plana çıkan sonuçlar olarak değerlendirilmiştir.
Continuous measurement of periodic performance is necessary for businesses in terms of their fundamental objectives of profitability and sustained growth. Financial analysis reveals the current state of the business from the past to the present and contributes to improving the accuracy of managerial decisions by making predictions about its future. Traditionally, financial analysis has focused on balance sheet and income statement information, evaluating these statements based on derived ratios. However, in parallel with the development and change in financial markets, the required information in financial analysis has diversified and expanded, incorporating the need for cash flow information. In this context, the cash flow statement has become the center of attention for business managers, potential investors who invest or intend to invest in the capital market, and credit institutions due to the benefits it provides.
In international financial reporting, it is mandatory to prepare cash flow statements and integrate them as an integral part of the financial statements. The cash flow statement displays the cash inflows and outflows generated by an entity during a specific period, categorized under operating, investing, and financing activities. It serves as a bridge between the income statement and the balance sheet, providing users with information that cannot be obtained from these financial statements. The cash flow statement presents a detailed breakdown of
cash flows, offering insights into the operating, investing, and financing activities of the business.
The aim of this study is to analyze the impact of cash flow statements on firm performance. Within the scope of this objective, cash flow statements prepared according to the 6-year International Accounting Standards (IAS) for the years 2014 and 2019 were examined for companies listed on Borsa Istanbul’s BIST 100 index. From the cash flow statement data, independent variables were identified as cash flows from operating activities (CFOA), net income (NI), changes in operating working capital (COWC), cash flows from activities (CFFO), cash flows from investing activities (CFIA), cash flows from financing activities (CFFA), dividend payments (DP), and ending cash and cash equivalents (ECE). The dependent variables are return on assets (ROA), return on equity (ROE), and Tobin’s q ratio. Panel data analysis was used to evaluate the impact of cash flow information on firm performance for companies operating in the manufacturing and non-manufacturing sectors of Borsa Istanbul.
In the manufacturing sector, a positive relationship was found between ROA and cash flows from operating activities, net income, and dividend payments, while a negative relationship was observed with changes in operating working capital. In non-manufacturing sectors, a positive relationship was identified between ROA and net income as well as between ROA and ending cash. In both the manufacturing and non-manufacturing sectors of Borsa Istanbul, a positive relationship was observed between ROA and net income.
In the manufacturing sector, a positive relationship was found between ROE and net income, cash flows from financing activities, and dividend payments, while a negative relationship was observed with changes in operating working capital. For companies operating outside the manufacturing sector, a positive relationship was identified between ROE and net income. In both groups, a positive relationship was observed between ROE and net income.
In the manufacturing sector, Tobin’s q was found to have a positive relationship with ending cash. In non-manufacturing sector firms, a positive relationship was observed between Tobin’s q and changes in operating working capital. However, when both groups were evaluated, no consistent relationship was found between cash flow information and Tobin’s q, similar to the findings for ROA and ROE.
The study aimed to assess the impact of cash flow information on firm performance. Within the scope of the evaluation, the relationship between cash flow information and the performance evaluation criteria of ROA, ROE, and Tobin’s q was examined using panel data analysis to determine its statistical significance. The findings revealed that cash flow information has a significant influence on firm performance.
In academic studies, the impact of cash flow information on firm performance can be evaluated by using different dependent and independent variables. The knowledge that cash flow information affects firm performance can be utilized as a tool by financial market participants in making investment decisions. Cash flow information, which has a lower risk of manipulation compared to balance sheet and income statement data, will contribute significantly as it enhances transparency levels.