The relationship between the components of current income and the future operating cash flow

The present research investigates the relationship between the components of current income and the future operating cash flow in 232 companies listed on the Tehran Stock Exchange from 2001 to 2008.

The results of panel data indicate that the current income can predict the future cash flow but the divided income has a higher predictability than the overall rate of income. Results also indicate that there is a significant relationship between accruals and operating cash flow and their components and the future cash flow. Findings also show that a model consisting of accrual and cash components at the level of all companies and industries has the least error and consequently the highest accuracy in predicting future operating cash flow among the proposed models.