Operating Cashflow Per Share: A Significant Improvement on Current Practice

Earnings per Share (EPS) forms the base for the Price/Earning (PE) ratio and is widely reported daily in the financial press for companies. EPS is calculated from the reported earnings. Cashflow statements provide useful information in addition to earnings. Cashflow from operation per share is not commonly reported by companies but is proven to be a very effective analytical tool in financial distress situation of a company. This paper examines such issues: Whether cashflow from operation per share is a better indicator of performance than EPS; Whether cashflow from operation per share would represent a significant improvement on current practice. Two groups ie Chief Executive Officers/Financial Controllers (CEOs/FCs) and Accounting Academics have been selected as subjects. Cross-tab statistics show a slightly difference in their score of perceptions. Where t-test shows there are no significant differences on perceptions between these two groups. However, another t - test was conducted to test of both groups' perceptions on whether there is too much useless regulation in the content and presentation of financial statements in Australia. A significant difference was found.