Investigation of the relationship between capital structure and cash flow statement

The present study aims to investigate the relationship between capital structures (financial leverage) and the components of cash flow statement to find if the financial leverage derived by debt financing affects cash flow. The information related to financial statements of food processing companies listed in Tehran Stock Exchange was applied. Results indicate that the use of financial leverage and its variations slightly affect the cash flow during the period. Of course, the effect is positive, i.e. with the increase in financial leverage; the cash flow would go up in the company as well, which is also followed by an increase in the cash flow achieved through operational and financing activities. However, no relationship was observed between financial leverage and investing cash flow.