A Model for Cash Flow forecasting in Iranian Companies

An economic unit's life, largely depends on its cash flows and balance between available cash and needs of cash, is the most important factor in the economic unit’s health. Since the liquidity situation is the basis for judging of many stakeholders like investors, creditors, analysts and other users about the economic situation, predicting future cash flows are of great importance.The purpose of this study is the comparison of Random Walk and Accrual Reversal model to prediction operating cash flow and examine some of firm’s characteristics that impact predicting models. For this reason, a sample of 1663 year/company among the list of Tehran Stock Exchange firms during the years2001-2011were examined.The findings indicate that the Random Walk model, in comparison with Accrual Reversal model, can predict operating cash flow, better. However, the results showed that, the companies that government had influenced them, the Accrual Reversal models are more suitable to estimate future cash flows.