Using A Cash Flow Model to Predict Future Cash Flow from Historical Cash Flow: Malaysian Perspective

This research aims to look into the role of historical cash flow in forecasting potential cash flows of Malaysian publicly traded companies. Construction, energy, and property are the industries chosen for this study. The data for this study came from the financial statements of 159 companies from those industries that were published on the Bursa Malaysia website from 2015 to 2019. The statement of profit or loss and cash flow statement are used to collect historical cash flow data. The cash flow model was used, and the three-year lags improve its predictive power in accounting results. This study found that the past one-year cash flows are a significant predictor and optimistic effect on forecasting potential cash flows. Taking all into account, this study will assist company executives in managing cash flows for ongoing operations, monitoring investment strategy, and tracking financing activities to ensure the organization's sustainability and growth. On the other hand, other business stakeholders may use historical cash flows to forecast potential cash flow investment decisions. This study is expected to have implications and benefits for all stakeholders concerned, including academics, professionals, and regulatory agencies.