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The Relevance of the Statement of Cash Flows in the Decision Making of Business Organizations: The Experience of the Banking Industry in Nigeria

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  • Monday Osirim

    (Department of Accounting Ken Sarowiwa Polytechnic, Bori Rivers State, Nigeria)

Abstract

The statement of cash flow provides an important ingredient for rational decision-making as regards the financial stability and viability of an organization. The success and survival of every organization depends on its abilities to generate enough cash inflows to meet its objectives. The study examines the relevance of the statement of cash flows in the decision making of an organization with a particular emphasizes on the banking sector in Nigeria. The  survey research design was adopted. The population of the study consists of commercial banks in Nigeria. The target population of the study consists of 750 employees of the 21 deposit money banks in Port Harcourt metropolis. A sample size of 261 was determined using Taro Yamen formula. Structured questionnaire was used as an instrument for primary data collection and was designed in Likert scale 5 points format  ranging from  strongly agreed = 5 to  strongly disagreed  = 1. It was evident from the empirical results that significant and positive relationship exists between cash flow and  decision-making. On the strength of this findings, it was recommended that  Regulatory Authorities such as the Financial Reporting Council of Nigeria, and the Securities and Exchange Commission  should develop a strong policy framework that will encourage the banking sector and other organizations to  establish  a result oriented cash flow system; that will enable the investing public to evaluate the financial viability and liquidity of an organization and to avail themselves of any financial risk capable of eroding their investment.

Suggested Citation

  • Monday Osirim, 2017. "The Relevance of the Statement of Cash Flows in the Decision Making of Business Organizations: The Experience of the Banking Industry in Nigeria," Business, Management and Economics Research, Academic Research Publishing Group, vol. 3(9), pages 151-158, 09-2017.
    • Handle: RePEc:arp:bmerar:2017:p:151-158
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    References listed on IDEAS

    as
    1. Olatundun Adelegan, 2003. "An Empirical Analysis of the Relationship between Cash Flow and Dividend Changes in Nigeria," African Development Review, African Development Bank, vol. 15(1), pages 35-49.
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