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The Relationship of Asset Flow Measures to Bond Ratings

J. Edward Ketz,John J. Maher-1990-06-22
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The Relationship of Asset Flow Measures to Bond Ratings In recent times there has been increased interest in the potential decision usefulness of asset flow measures (i.e., income, income plus depreciation, working capital from operations, and cash flow from operations). In particular, some individuals and regulatory bodies have proposed to increase the disclosures and/or the analysis of corporate cash flows (Drtina and Largay [9], FASB [11, 12], Heath [20], Ijiri [22, 23, 24], Largay and Stickney [29], and Thomas [36]). The FASB [13] responded by issuing Statement of Financial Accounting Standards No. 95, which requires corporations to issue a cash-flow statement. While it is known that cash flow from operations is an empirically distinct construct from the other three asset flow measures (Gombola and Ketz [17, 18]), there is not much evidence as to whether cash flow is an important construct in decision contexts. One area that has been investigated is the role of asset flow measures

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The Relationship of Asset Flow Measures to Bond Ratings In recent times there has been increased interest in the potential decision usefulness of asset flow measures (i.e., income, income plus depreciation, working capital from operations, and cash flow from operations). In particular, some individuals and regulatory bodies have proposed to increase the disclosures and/or the analysis of corporate cash flows (Drtina and Largay [9], FASB [11, 12], Heath [20], Ijiri [22, 23, 24], Largay and Stickney [29], and Thomas [36]). The FASB [13] responded by issuing Statement of Financial Accounting Standards No. 95, which requires corporations to issue a cash-flow statement. While it is known that cash flow from operations is an empirically distinct construct from the other three asset flow measures (Gombola and Ketz [17, 18]), there is not much evidence as to whether cash flow is an important construct in decision contexts. One area that has been investigated is the role of asset flow measures

Keywords

Cash flowAsset (computer security)Actuarial scienceCash flow statementCash flow forecastingBondEarningsFinancial statement

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