Cash flow and its impact on banking performance

Abstract

The list of cash flows is one of the main financial statements that the accounting standards and international financial reporting required the economic units to prepare, along with the income statement and the statement of financial position. during the period of preparing the financial statements. The application of economic units financial analysis for the purposes of evaluating the financial performance of the unit, and the validity of this financial analysis depends on the accuracy and soundness of the financial statements, especially the income statement and the statement of financial position, and there are several methods of financial analysis, including comparative analysis, and analysis using financial ratios, regardless of the method of analysis approved.

 The analysis that relies on the income and financial position lists gives somewhat incorrect results, and the reason is due to the failure of these two lists to provide appropriate financial information for all beneficiaries. The banking system plays a vital role in the economic reality of all countries. We cannot imagine a developed and sound economy without a system A sophisticated and regular banking system, as banks (according to their traditional concept) play the role of mediator between economic units with a surplus (savers) and economic units with a deficit (borrowers).

 The adoption of the statement of cash flows to conduct additional financial analyzes enhances the ability of the beneficiary to make a rational decision, as it was prepared on a cash basis and not on an accrual basis, as in other lists, as the statement of cash flows discloses the real liquidity of the economic unit, which helps users of financial statements to measure the ability of the unit Therefore, the financial analysis based on the statement of cash flows gives sufficient time for the economic unit to study the available financing alternatives instead of turning to the high-cost financing sources.

Keywords: cash flow, banking performance, regulatory factors.