The Connection between Cash Flows and the Financial Performance of Non Financial Firms An Empirical Evidence from the Ghana Stock Exchange GSE

The objective of this research was to examine the connection between cash flow and the financial performance of Ghana Stock Exchange GSE listed non financial companies. In particular, the research sought to identify the affiliation between cash flow and finanical performance of companies as measured by Return on Assets ROA examine the connection between cash flow and financial performance of companies as measured by Return on Equity ROE and create a association between cash flow and financial performance of companies as measured by Earnings Per Share EPS . The research was quantitative because it aimed at classifying characteristics, quantifying them in terms of numbers and creating a statistical model for testing hypothesis and explaining observations. The research was specifically correlated in nature as it attempted to investigate the bivariate connections between cash flow and the financial performance of the companies. The research was lastly a nature panel because, at distinct points in time, it attempted to collect data on the same study units. Secondary panel data from 15 non finanical institutions were sampled for the study. For the research, both the descriptive and inferential data analysis methods were used. The mean, standard deviation, variance, minimum and maximum values, skew and kurtosis of the factors of the study were analyzed in the descriptive data analysis method, while the Pearson Product Moment Correlation Coefficient information analysis method was used to identify the bivariate connections between cash flow and financial performance of the companies. All information assessment was performed using STATA version 15 statistical software package at an alpha a rate of 5 percent p= 0.05 . cash flow had an insignificent negative association with the firms financial performance of the companies as measured by ROA from the correlation estimates of the study. But an insignificantly positive connection was also discovered between cash flow and the ROE but EPS of the companies had an insignificant negative link with the financial performance of the companies. Based on the results, the research suggested that, as an rise in cash flow resulted in a reduction in the financial performance of the companies as measured by ROA, the officials of the sampled companies should take a lecture on the predictors of the cash flow of the companies as such predictors could directly impact the cash flow of the companies and then their final result. There is also a need for companies to improve their profitability in the elements of client base, net assets, sales volume and market share to boost their cash flow. Increasing the cash flow of the companies will not only increase them in terms of profitability, but will also help them achieve competitive advantage over others as bigger companies are anticipated to be more effective than their lower counterparts and have better funds to survive financial downturns. 

by Takyi Hannah Nyamaa | Takyi Kwabena Nsiah | Wilson Elorm Pekyi | Raphael Amoakoh Addai "The Connection between Cash Flows and the Financial Performance of Non-Financial Firms: An Empirical Evidence from the Ghana Stock Exchange (GSE)"

Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019,

URL: https://www.ijtsrd.com/papers/ijtsrd28129.pdf

Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/28129/the-connection-between-cash-flows-and-the-financial-performance-of-non-financial-firms-an-empirical-evidence-from-the-ghana-stock-exchange-gse/takyi-hannah-nyamaa

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