Cashflow Statement as a Means of Performance Evaluation

ABSTRACT

This study sought to evaluate cash flow statement as a means of performance evaluation in manufacturing industries. A lucid but explanatory introduction of the subject was given, highlighting the objectives of the study which are; to determine whether there is correlation between cash outflow and inflow and also to ascertain if profit varies directly with cash flow (cash inflow, cash outflow). The introduction precludes a review of the related literatures. The research methodology asserted for the collection of data for this study was solely based on the secondary source and these data were collated using the financial statements, which were gotten from the randomly selected manufacturing industries. KARL Pearson Moment Correlation Coefficient was used to analyze the data collected.

The study revealed that the cash flow statement serves as a means of performance evaluation in manufacturing industries. It was also found from the coefficient of correlation that there is a direct relationship between cash flow and profit. The study also supposes that there is correlation between outflow and inflow of cash in manufacturing industries. On the basis of these findings, it was recommended that the issue of cash management be taken seriously and pursued efficiently as oppose to the reliance of the profit as shown in the income statement.