The Impact of Cash Flow Patterns on Company Performance: A Malaysian Perspective
(Pages 1550-1560)Syahirah Adnan1, Norhayati Alias1, Mazurina Mohd Ali1,*, Suhaily Hasnan1, Yuan Chang2
1UNITAR International University, Tierra Crest, Jalan Petaling Jaya, Selangor, Malaysia.
2Department of Finance, National Changhua University of Education, Changhua City, Taiwan, (R.O.C).
DOI: https://doi.org/10.55365/1923.x2023.21.170
Abstract:
The purpose of this study is to examine the effect of cash flow on the performance of Malaysian companies. This study examines eight types of cash flow patterns which are used as an alternative tool to predict incidents leading towards distressed companies. Cash flow patterns are derived from both positive and negative signs of cash flow components, which consist of operating, investing and financing activities. Company performance in this study is differentiated between PN17 listed companies and non-PN17 listed companies. The total sample for this study comprises of 32 companies. Data are then collected from these companies’ annual reports, as well as additional financial data from Refinitiv Eikon’s Datastream. The results show that there is no significant difference of cash flow pattern with company performance. Meanwhile, the different patterns of cash flow from operating, investing and financing activities are insignificant predictors towards financial distress. The implication of the above empirical results suggests that cash flow as a financial indicator is not able to provide enough information and evidence towards company performance. This may be implied similarly for company performance post-Covid 19, as cash flow may not be a relevant metric during the pandemic, as businesses faced unprecedented challenges might not be captured by traditional financial indicators. The pandemic may have revealed some weaknesses in traditional financial indicators, highlighting the need for more nuanced and comprehensive measures of company performance. In addition, this study highlights the importance of including as much financial and non-financial information as possible in evaluating company performance.
Keywords:
Distressed Company, Financing, Indicator, Investing, Operating, Sign.
How to Cite:
Syahirah Adnan, Norhayati Alias, Mazurina Mohd Ali, Suhaily Hasnan, Yuan Chang. The Impact of Cash Flow Patterns on Company Performance: A Malaysian Perspective. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a170/
Licensee REF Press This is an open access article licensed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted, non-commercial use, distribution and reproduction in any medium, provided the work is properly cited.