Cash Flow Reporting Practices in Bangladesh: A study on textile and Clothing Companies

Abstract

Cash flow statement is an integral part of the financial statements. Although preparation of cash flow statement is not mandatory as per Companies Act 1994, public limited companies enlisted with stock exchange are to prepare this statement as per other statutory laws and regulations. Since cash flow statement endows with information on the cash flows from a company's operating, investing and financing activities to enable users of its financial statements to appraise the ability of the company to generate cash and to predict cash flows, companies are now preparing this statement as an fundamental part of their financial statement. This paper examines empirically the current practices followed by sample companies in preparation of cash flow statement and concludes that sample companies are in line (with a few exceptions) with the requirements of International Accounting Standard-7 (IAS-7) and Bangladesh Accounting Standard- 6 (BAS-6) and suggests to overcome these exceptions by following BAS-6.