Perception of Cash Flow Statements as Financial Information Source and Analytical Tool

Abstract

Cash Flow Statements can be used as a financial information source and analytical tool especially as to the operating, financing, and investing activities of an agency. This study tried to determine the perception of key respondents, composed of mayors, local executives, accountants and other key informants from 15 agencies (8 LGUs, 3 NGAs and 4 GOCCs) in Dumaguete City, Siquijor, and Negros Oriental towards Cash Flow Statements. Specifically, it determined why and how these are produced, how often they are produced, and how they are perceived. The study, which was conducted from October 2007 to February 2008, used a one-shot post test design. They key informants were interviewed using an unstructured questionnaire either face-to-face or through telephone calls. For the content analysis, a sample Cash Flow Statement was collected from an LGU, an NGA, and a GOCC, and these were evaluated using four criteria: objective, systematic, quantitative and manifest. Results showed that most (about 53.33%) of the agencies prepared Cash Flow Statements to monitor inflows and outflows. Majority (86.67%) used the direct method in preparing Cash Flow Statements. Direct method means presenting cash inflows and outflows categorized under operating, financing, and investing activities of the agency. More agencies (30%) also prepared these quarterly. Many employees felt that the Cash Flow Statements were useful as analytical tools and financial information source. Lastly the Cash Flow Statements of three sample agencies met all the criteria for evaluation: they were objective, systematic, quantitative and manifest.