A Cash Flow Correlation Study of Five Manufacturers

Date of Submission


Document Type


Degree Name

Master of Science in Accounting




Michael Rolleri


Business enterprises--United States--Finance, Cash flow--United States

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1987 no. 11


Knowledge of companies' practices in obtaining financing and application of cash in their operations is a useful tool in understanding business and investment activity. This project attempted to identify correlations between the major components of the statement of changes in financial position and other commonly used financial and economic indicators. When such correlations are known, they may be used by managers and analysts to improve performance or identify attractive investment candidates.

The study concentrated on a sample group of five electrical and electronics manufacturers which were traded in the over the counter market and had headquarters in Connecticut. These firms provide audited financial statements and should be expected to share many similar financial and economic characteristics as needed for such an analysis to be practical.

The study identified a number of items which were correlated and others which were not correlated using the coefficient of determination and Spearman's rho. No indicator exhibited perfect correlation with any component of the statement of changes in financial position. These findings could be used as the subject of additional work to identify causal relationships and better correlations using nonlinear functions and multivariate analysis which were beyond the scope of this study.