The Effect of Cash Flow Volatility, Sales Volatility, and the Operating Cycle on Earnings Persistence

ABSTRACT : Earnings persistence is profit that does not fluctuate and reflects a sustainable profit in the futurefor a long period. Users of company financial statements certainly expect the company to have persistent profits,because non-persistent profits will cause inaccurate problems in decision making based on future conditions,therefore companies need to manage effectively the factors that affect earnings persistence so that the companycan have a persistent profit. The purpose of this study was to determine the effect of cash flow volatility, salesvolatility, and the operating cycle on earnings persistence. This research was conducted at hotel and tourismsector companies listed on the IDX from 2014-2018. The number of samples taken was 50 observations for 10companies with non-probability sampling methods and purposive sampling techniques. The data analysistechnique used is multiple linear regression analysis. Based on the analysis, it was found that cash flow volatilityand the operating cycle had a negative effect on earnings persistence, while sales volatility had a positive effecton earnings persistence.

Keywords – Cash Flow Volatility, Sales Volatility, Operating Cycle, Earnings Persistence