Review of Relationship between Debt Ratios with Selected Elements on Cash Flow Statement

The present research is aimed at examining the relation between debt ratios with selected elements on cash flow statement. Because financing decisions and attaining the optimum of the capital structure, and developing cash flows, proper usage of financial sources obtained and debt repayment ability on the other hand, are among the most significant issues in the management decision making process. One of the several alternatives to help managers in this area is using the cash flow statement, which reflects the company's ability in creating cash flows, meet obligations and use of investment opportunities. In this study, we try to find out whether or not the financing leverage which are the effect of cash flows. We examined 121 firms over the period 2003-2008 which they were selected from Tehran stock exchange (TSE). Hypotheses of this research have been evaluated by using correlation coefficient test, CUSUMSQ and CUSUM graphic testes. The results of this research show that there are significant relationships among debt ratios (current debts to equity, current debts to total assets, long-term debts to equity, long-term debts to total assets, total debts to total assets and total debts to equity) and selected elements cash flow statement consist of operational, investment and financial activities.