Cash Flow Statement Analysis As A Tool For Assessing Liquidity

Abstract

This study investigates how the cash flow statement assesses liquidity and financial health between 2014 and 2023, addressing limited understanding of its analytical role. Focusing on El Aurassi Hotel, it examines operating cash flows’ implications for stability, financial risk, and decision-making. Employing a case study methodology, financial statement analysis, and correlation analysis, it evaluates operating, investing, and financing cash flows alongside key financial indicators. Findings revealed that El-Aurassi Hotel’s operational cash flows fluctuated sharply, reflecting managerial and environmental impacts. Despite pre-2018 strength, post-pandemic recovery remains partial. Investment cash flows showed inefficient capital allocation, while financing flows indicated persistent deficits and debt reliance. Overall, weak liquidity management and bounded rationality limited financial stability and sustainability. The Quick Ratio showed a moderately positive correlation (+0.541) with cash flows, while Cash Turnover (-0.286), Interest Coverage (-0.062), and Debt-to-Equity (-0.286) showed weak negative relations.