Operating Cash Flows: A Growing Need for Separate Reporting

Abstract

This study provides empirical evidence on the extent to which cash flow from operations is not proxied by more traditional performance measures such as income from continuing operations and working capital from operations. The study reaches definitive conclusions about the potential of these three measures to have differential information content; accordingly, an effort should be made to clarify and standardize the separate reporting of cashflow from operations statements. These results and those of previous research lead to the conclusion that a requirement for separate reporting of cashflow from operations is an idea whose time has come.