The Role of Financial Indicators Derived from the Cash Flow Statement in Liquidity Risk Management

Application to a Sample of Banks Listed in the Iraq Stock Exchange

Abstract

This research aims to highlight the important role of financial indicators derived from the cash flow list in assessing liquidity risk management by applying to a sample of banks listed in the Iraq Stock Exchange by showing the possibility of achieving alignment, linking and analysis between financial indicators derived from the list of cash flows and risk management Liquidity through their rates. This is done by determining the nature of the impact and the relationship between financial indicators derived from the cash flow statement in assessing liquidity risk management. The problem of the study is centered in that the banks listed in the Iraqi Stock Exchange depend largely on the basis of accrual, through the income and financial position statements, despite the presence of some shortcomings, and the consequent inability of the accounting system to provide the necessary information for users of financial statements to take Investment decisions and we conclude that the financial indicators derived from the cash flow statement, and specifically the two indicators of operating cash flow and return on assets, to assess liquidity risk management in order to improve and take appropriate decisions. The results of the research revealed that there is a relationship and a significant impact on the two indicators of operational cash flow and return on assets to assess liquidity risk management, as the calculated value of the (P-Value) level reached between (0.007-0.020), which is relatively small than the value of the hypothetical morale level, which was adopted by the research. On the use of financial ratios based on accrual basis (income statement) and financial ratios based on cash basis (statement of cash flows) together when evaluating risk management in banks in particular.