Journal of Accounting, Marketing and Financial Management (JAMFM)
Measuring the Earnings Quality in Iraqi Commercial Banks On the Basis Of Net Income and Net Operating Cash Flows
(This article belongs to Vol - 01, Issue - 02)
Abstract— The purpose of this study is to determine the influence of the net operating cash flow and net income as an indicator of the earnings quality in Iraqi commercial banks, with a view to testing the influence of net operating cash flow to the earnings quality.
In order to realize the purpose of this study, the published financial statements has taken into consideration for (4) banks listed in Iraq Stock Exchange during the period of 2012 – 2015, where the researchers have analyzed the relationship between the net income and the operating cash flow by calculating the operating cash flow index for each bank which indicates how the reported income can continue for future periods regardless the current amount of net income. Hence, the net income does not reflect realistic earnings power of the period without comparing it with the operating cash flow, and for that the users of financial statement have to measure the earnings quality to reveal any influence on the net income and to gauge the ability of reported earnings in generating cash flows, and to know about these earnings are sustainable for future periods or not.