statistically reliable for the same lags. Finally, the coefficients for changes
in inventory and changes in receivables are positive and statistically significant. The
change in inventory coefficients are 0.47 and 0.65, whereas the change in receivables
coefficients are 0.53 and 0.30. These coefficients indicate that firms with increased
receivables have higher future cash flows, presumably from increased future collections
from customer. Similarly, firms with inventory increases have higher future cash flows,
in all likelihood from increases in sales. Overall, the models explain 60% and 79% of the
variation in one-year- and two-year-ahead cash flows respectively.