Cash flow ratio analysis and financial performance of listed firms in Ghana.
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Date
2023
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KNUST
Abstract
Cash inflows and outflows are the lifeblood of and the key determinant of firm value. Also, cash as the lifeblood of any business means, it is a vital component required for effective management. The current study is motivated by the lack of an updated approach to appraising financial profitability which may not present the true nature of the growing economy of Ghana thus, the need for a robust approach to enhance the appeal to investors. Financial analysis based on standard ratios, such as return on assets and net sales to income, can often overestimate or underestimate financial results, leading to a flawed assessment of a company's financial health. Therefore, this study uses cash flow ratios as a more reliable method to determine how much revenue a company has produced. This study aims to evaluate the impact of cash flow analysis on the financial performance of listed firms in Ghana. The sample consists of 16 firms quoted on the Ghana Stock Exchange, covering the period from 2012 to 2021. Data were obtained from secondary sources, and financial performance was assessed using regression analysis. The study found that cash flow from financial activities has a significant impact on the performance of listed firms measured by return on equity (ROE). The study recommends that listed companies in Ghana adopt cash flow analysis as a robust method to evaluate financial profitability. This approach can increase the attractiveness of these companies to potential investors in Ghana's growing economy.
Description
A thesis submitted to the college of humanities and social sciences, school of business, kwame nkrumah university of science and technology in partial fulfillment of the requirement for the degree of Master in business administration (accounting option)