The role of operational and investment activities in the cash flow statement in the effectiveness of working capital efficiency in Sudanese banks: A case study on banks operating in the Nile River State

Abstract

The Statement of Cash Flows is considered one of the most important financial statements because it provides financial information by relying on the cash basis, and this statement contributes to identifying the activities of banks through incoming and outgoing cash flows.

The research problem was to demonstrate the impact of the Statement of Cash Flows on the effectiveness of working capital efficiency in Sudanese banks. The study aimed to identify the role of the activities and methods of the Statement of Cash Flows in the effectiveness of working capital efficiency in Sudanese banks through (Operating Activities - Investing Activities - Financing Activities). The research addressed the extent of a strong, statistically significant relationship between both the operating activities of the Statement of Cash Flows and the effectiveness of working capital efficiency, and the extent of a statistically significant relationship between both the investing activities of the Statement of Cash Flows and the effectiveness of working capital efficiency.

The study used the descriptive analytical approach to describe and diagnose the study variables and analyze the field study data, which was collected via a questionnaire as a primary data collection tool, and through reports and publications for secondary data collection. The primary data was analyzed using the Statistical Packages for the Social Sciences (SPSS) program, in addition to the Chi-square test for independence to test the hypotheses using frequencies and percentages. In light of the collected and analyzed data and information, the study concluded by stating the importance of focusing on the elements of operating activity and its effect on rationalizing investment decisions, and the study proved that cash flows have a significant and positive impact on the bank's profitability. The study supports both the theoretical and empirical evidence from previous studies that cash, operating, and financing flows positively affect the bank's profitability.

Among the most important recommendations, the study recommended the necessity of publishing the Statement of Cash Flows in banks due to the vital information it contains, which differs from the information provided by other financial statements. This study also recommended paying attention to the net cash flows from operating activities due to their role in making appropriate investment-related financial decisions, and the qualification and training of bank employees at their different levels.