TRADITIONAL VERSUS OPERATING CASH FLOW IN FAILURE PREDICTION
分析破产与非破产公司在应计和递延调整上的差异，发现传统现金流比经营现金流更稳定可靠地预测破产，破产公司主要通过减少存货和应收账款、增加应付账款来调整。
Prior empirical evidence shows that accrual and cash based flow ratios (traditional and operating cash flows) refer to different financial dimensions. This leads to different predictive abilities in failure prediction. The purpose of this study is to analyse the behaviour of failing and nonfailing firms in terms of accruals and deferrals (adjustment entries) to show the distinctive nature of the ratios. This analysis is made conceptually and empirically. The degree and order of the use of adjustment entries is presupposed to depend on four kinds of factors (revenue of expenditure adjustment, direction of adjustment, cost of adjustment, and maximum size of adjustment). The empirical results show that traditional cash flow is a more stable and reliable predictor of failure than operating cash flow. The most important adjustment entries used by failing firms were to decrease inventories and accounts receivable and, in the last phase, to increase accounts payable.