AN INVESTIGATION ABOUT THE INFORMATION CONTENT OF EARNINGS & CASH-FLOWS IN ANTICIPATING OF LIQUIDITY POSITION OF LISTED COMPANIES IN TEHRAN STOCK EXCHANGES

Abstract

Many decisions within the existing economic environment of countries are made using accounting information systems which play a significant role in organizational activities. For this purpose, earnings, as a key piece of information in financial statements, are used as a measure to assess performance and liquidity of firms and institutions. In the present study, a sample consisting of 70 firms listed on the Tehran Stock Exchange (2006-2010) was taken, and the relevance of earnings and cash flows in predicting liquidity was assessed by making use of multiple linear regression, Durbin-Watson test, Kolmogorov–Smirnov test, variance analysis, and squared correlation coefficient for data analysis. The findings suggest that both net operating income and net cash expand cash conversion cycle and can explain a large part of variations in cash conversion cycle.