Abstract
This article aims to determine the ability of three different models in terms of forecasting future cash flow. Thisstudy was conducted from a representative sample of Tunisian commercial companies. The results introduce thatthe forecasting model more effective in the context of Tunisia is the one based on the timely debt collection,gross commercial margin, timely flow of stock and timely debt payment. The predictive power of this model wasshown at the horizon of one, two and three years. The past cash flow presents also a good predictor of futureoperating cash flow; but with a lower predictive power compared to that of the elements related to the operatingcycle. In the other side, the results show that the model based on past earning is defective in terms of forecastingfuture cash flow.
Highlights
Considering the importance and the utility of information based on operating cash flow, much research was evoked in order to forecast this variable
The estimation results of forecasting models at the horizon of two years show the superiority of data based on elements related to the operating cycle compared to data based on past cash flows and earnings
The predictive power was reduced to 28.18%, we find that the coefficient of explanatory variable operating cash flow at t-3 is still significant at 1%
Summary
Considering the importance and the utility of information based on operating cash flow, much research was evoked in order to forecast this variable In this regard, it is to remember that the FASB (Financial Accounting Standard Board) affirmed in 1978 that the last earnings provide a better base for the estimate of future operating cash flow than the data based on last cash flows. Their work demonstrated the importance of these factors on the behavior of operating cash flows They established a causal relationship between operating cash flows and four explanatory variables namely the timely debt collection, the gross commercial margin, the timely flow of stock and the timely debt payment. These results were obtained from a significant sample of Tunisian commercial companies
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