Forecasting of Operating Cash Flow: Case of the Tunisian Commercial Companies

Abstract

This article aims to determine the ability of three different models in terms of forecasting future cash flow. This
study was conducted from a representative sample of Tunisian commercial companies. The results introduce that
the forecasting model more effective in the context of Tunisia is the one based on the timely debt collection,
gross commercial margin, timely flow of stock and timely debt payment. The predictive power of this model was
shown at the horizon of one, two and three years. The past cash flow presents also a good predictor of future
operating cash flow; but with a lower predictive power compared to that of the elements related to the operating
cycle. In the other side, the results show that the model based on past earning is defective in terms of forecasting
future cash flow.