An Empirical Evidence on the Popularity of Cash Flow Methods in Bangladesh

Abstract

This study intends to examine the popularity of cash flow reporting method in terms of under stability, satisfaction, relevant, reliability and usefulness to the decision-making process of users of financial reports in the context of Bangladesh. The user groups selected for the survey are managers, shareholders, employees, suppliers, and customers. Results demonstrate that overall the direct method of reporting cash flows is considered superior to the indirect method by these user groups. Managers and shareholders respond that the direct method helps them to understand cash flow data, satisfies their needs for decision-making purposes, and is relevant and reliable. On the other hand, only a small majority of employees, suppliers and customers believe that the direct method is superior to the indirect method of reporting cash flows. Further, a majority of employees and customers had the same feelings towards the relevance and reliability of the direct methods of reporting cash flows over indirect method.

Keywords: Cash flow Statement (CFS), Direct Method, Indirect Method, Users of Cash flow Statements. Bangladesh