scholarly journals The Effect of Firm Cash Flow on Investment Decision Moderated by Financial Constraint and Mispricing

2019 ◽  
Vol 1 (2) ◽  
pp. 77-90
Author(s):  
Andewi Rokhmawati
Keyword(s):  
Cash Flow ◽  
Lower Cost ◽  
Investment Decision ◽  
Cash Flows ◽  
Internal Source ◽  
Financial Constraint ◽  
External Funding ◽  
Financial Report ◽  
Moderating Variables ◽  
Common Stocks

This study aims to examine the effect of cash flows on investment decision that is moderated by financial constraint and mispricing. The population of the study was all listed-manufacturing firms in Indonesia from 2014 to 2016. Samples were chosen based on the availability of firms’ financial report covering the period of the study. By using moderated regression analysis where financial constraint and mispricing as moderating variables, the study concluded that financial constraint weakens the effect of cash flow on investment. Although lower financially constrained-firms have an opportunity to choose their source of funding, they prefer to finance their investment from an internal source of funding (from cash flows) due to lower risk. Furthermore, mispricing does not have a role as a moderating variable. In this condition, overvalued firms are indifferent from choosing the source of funding. Finally, when financial constraint and mispricing are signed as a moderating variable, they weaken the effect of cash flow on investment. It means that firms with lower financial constraint and overvaluation prefer to use external funding by issuing new common stocks because it provides a lower cost of capital.

scholarly journals CASH FLOW, PROFITABILITY, LIQUIDITY AND INVESTMENT IN INDONESIA WITH FINANCIAL CONSTRAINT AS VARIABLE MODERATING

2020 ◽  
Vol 5 (1) ◽  
pp. 61-74
Author(s):  
Ibnu Damanudin ◽  
Risal Rinofah
Keyword(s):  
Cash Flow ◽  
Financial Constraints ◽  
Stock Exchange ◽  
Total Sample ◽  
Financial Constraint ◽  
Moderating Variables ◽  
Analysis Technique ◽  
Food And Beverage ◽  
Positive Effect ◽  
Observation Period

The purpose of this study is to determine the sensitivity of cash flow, profitability, liquidity, on investments with financial constraints as moderating variables. In manufacture company food and beverage sub-sector company for the period 2015-2018. The population in this study are all food and beverage sub-sector companies listed on the Indonesia Stock Exchange. The observation period used are 2015-2018 or 4 years. The sample is using purposive sampling method, so that a total sample of 10 samples was obtained multiplied by the observation period for 4 years to 40 research data. Data analysis technique used is multiple linear analysis method with a significant level of 5% (0.05). The results of this study indicate that cash flow and liquidity are not reflected on investments. While the profitability variable has a significant positive effect on investment. Different results are billed when cash flow and liquidity are moderated by financial constraints, cash flow and liquidity have a greater effect on non-financial constrained companies. While profitability does not have a different effect on financial constraint or unconstraint companies

Aurora Textile Company

2017 ◽  
pp. 1-14
Author(s):  
Kenneth M. Eades ◽  
Lucas Doe
Keyword(s):  
Cash Flow ◽  
Financial Distress ◽  
Textile Industry ◽  
Capital Investment ◽  
Investment Decision ◽  
Flow Analysis ◽  
Cash Flows ◽  
List Type ◽  
Discounted Cash Flow ◽  
Cost Information

This case asks the student to decide whether Aurora Textile Company can create value by upgrading its spinning machine to produce higher-quality yarn that sells for a higher margin. Cost information allows the student to produce cash-flow projections for both the existing spinning machine and the new machine. The cash flows have many different cost components, including depreciation, the number of days of cotton inventory, and the liability costs associated with returns from retailers. The cost of capital is specified in order to simplify the analysis. The analysis has added complexity, however, owing to the troubled financial condition of both the company and the U.S. textile industry, which is in decline as manufacturers migrate to Asia to benefit from lower manufacturing costs. This begs the question whether management should invest in a declining business or harvest the company by paying out all profits as a dividend to the owners. The case is suitable for students just beginning to learn finance principles, but is also rich enough to use with experienced students and executives. The primary learning points are as follows: The basics of incremental-cash-flow analysis: identifying the cash flows relevant to a capital-investment decision The construction of a side-by-side discounted-cash-flow analysis for a replacement decision How to adapt the NPV decision rule to a troubled or dying industry The effect of financial distress on the NPV calculation The importance of sensitivity analysis to a capital-investment decision

The Time-varying Cash Flow Sensitivity of Cash

2014 ◽  
Vol 15 (2) ◽  
pp. 1-34
Author(s):  
NyoNyo Aung Kyaw ◽  
Sijing Zong
Keyword(s):  
Cash Flow ◽  
Cash Flows ◽  
Time Varying ◽  
Financial Constraint ◽  
Manufacturing Companies ◽  
Macroeconomic Conditions ◽  
Flow Sensitivity ◽  
Time Period ◽  
Cash Flow Sensitivity ◽  
Using Data

By using data of US manufacturing companies, we revisit the cash flow sensitivity to cash in two sub-samples of 1993-2000 and 2000-2011 to investigate the time-varying features of the cash flow sensitivity of cash. Our results show a weakening coefficient of US manufacturing firms from 1990s to 2000s. The sensitivity in the later time period is only a half of its original scale. Financially unconstrained firms seem to converge with the constrained firms in the later period, leading to the conclusion that macroeconomic conditions impact more on the cash flow sensitivity of cash than the external financial constraint does. Further, our research identifies that the overall decreasing sensitivity is driven by firms with negative cash flows.

Cash Flow, Profitability, Financial Constraint, and Investment in Indonesia

2016 ◽  
Vol 1 (1) ◽  
Author(s):  
Risal Rinofah
Keyword(s):  
Regression Model ◽  
Multiple Regression ◽  
Cash Flow ◽  
Investment Decision ◽  
Financial Constraint ◽  
Manufacturing Companies ◽  
Logit Regression ◽  
Investment Level ◽  
Logit Regression Model ◽  
Positive Effect

This study aims to find the effect of cash flow, profitability, and financial constraint on investment decision in Indonesia. Previousstudies have proved that cash flow, profitability, and financial constraint have an effect on company investment level. The utilization of logit regression model to classify the condition of financial constraint and multiple regression on the 123 samples of manufacturing companies during 2012 – 2014 period find that cash flow and profitability has a positive effect on investment level in company that face financial constraint and financial unconstraint company. The moderating test shows that profitability has stronger effect on the investment level that experience financial constraint rather than in financial unconstraint company. Meanwhile, cash flow does not have different effect on financial constraint or unconstraint companies.

scholarly journals FINANCIAL DISTRESS PREDICTED BY CASH FLOW AND LEVERAGE WITH CAPITAL INTENSITY AS MODERATING

2019 ◽  
Vol 7 (1) ◽  
pp. 18-29
Author(s):  
Deden Edward Yokeu Bernardin ◽  
Tifani Tifani
Keyword(s):  
Early Detection ◽  
Cash Flow ◽  
Significant Influence ◽  
Financial Distress ◽  
Research Method ◽  
Capital Intensity ◽  
Cash Flows ◽  
Financial Difficulty ◽  
Financial Report ◽  
The Face

The level of financial distress is a condition where the company's finances are in an unhealthy state or crisis. This study aims to examine the effect of cash flow and leverage in predicting the level of financial distress which is moderated by capital intensity at PT. Indah Karya (Persero). The research method used is descriptive verification with a quantitative approach. To assess this research, the 2013-2017 Quarterly Financial Report is used. The results showed that cash flows has a negative and significant influence in predicting the level of financial distress, leverage (debt to asset ratio) has a positive and insignificant influence in predicting the level of financial distress, capital intensity has a negative and insignificant effect in moderating the effect of cash flows on the level of financial difficulty and capital intensity has a positive and insignificant influence in moderating the influence of leverage in predicting the level of financial distress. Simultaneously cash flow and leverage in predicting the level of financial distress which is moderated by capital intensity together - have a significant effect on the condition of the level of financial distress of PT. Indah Karya (Persero). Another result found in this study is that the capital intensity variable in moderating leverage has the strongest influence in predicting the level of corporate financial distress which is seen by using an assessment of total assets to sales and debt to asset ratio. With these results, the company can use it as an early detection in the face of financial distress. Keywords: CashFlow, Leverage, Capital Intensity, Financial distress

scholarly journals "What If" Analyses in Investment Decision Making

2012 ◽  
Vol 3 (3) ◽  
pp. 5-16
Author(s):  
Katarína Belanová
Keyword(s):  
Decision Making ◽  
Cash Flow ◽  
Net Present Value ◽  
Investment Decision ◽  
Cash Flows ◽  
Present Value ◽  
Discounted Cash Flow ◽  
Basic Approach ◽  
Investment Decision Making ◽  
Future Cash Flows

In general, each project`s value is estimated using a discounted cash flow (DCF) valuation, and the opportunity with the highest value, as measured by the resultant net present value (NPV) will be selected. The problem with such NPV estimates is that they depend on projected future cash flows. If there are errors in those projections, then estimated net present values can be misleading (a forecasting risk). Basic approach to evaluating cash flow and NPV estimates involves asking “what – if” questions. Accordingly, the paper discusses some organized way s of going about a what – if analysis. Its goal in doing so is to assess the degree of forecasting risk and to identify those elements that are the most critical to the success or failure of an investment. However, as we show in examples, as well as in the practical study, though what – if analysis really allows us to obtain the certain idea of degree of forecasting risk, it does not tell us what to do about the possible errors.

scholarly journals An Analysis Of Cash Flow Report Effect On Financial Performance (Case Study In Course And Training Institutions Putra Perwira Sukoharjo 2014-2016)

2018 ◽  
Vol 2 (01) ◽  
Author(s):  
Sri Supatminingsih ◽  
Setyawati Setyawati
Keyword(s):  
Financial Performance ◽  
Cash Flow ◽  
Significant Influence ◽  
Cash Flows ◽  
Investment Activity ◽  
Financial Report ◽  
Operating Variables ◽  
And Training ◽  
Training Institute ◽  
Operating Activities

The purpose of this study is 1) To determine the effect of cash flow of operating activities partially to the financial performance at the Institute Course and Training Son Sukoharjo officers. 2) To know the effect of cash flow from investment activity partially to financial performance at Training Institute Institute and Training of Officer Sukoharjo. 3) To know the effect of cash flow from financing activities partially to financial performance at Training Institute Institute and Training of Officer Sukoharjo. 4) To determine the effect of cash flows from operating activities, cash flows from investment activities and cash flows from simultaneous financing activities to financial performance at the Course Institute and Training of Officers of Sukoharjo Officers. 5) To find out how much the cash flow effect of operating activities, the flow Cash from investment activities and cash flows from simultaneous financing activities to financial performance at the Sukoharjo Personnel Training Course and Training Institute. The object of this research is the institute's financial report and the training of sukoharjo officer's son. The sample in this study using financial report data while the period of data used in this study from monthly data from 2014 until 2016. Based on the results note that the operating variables have a partial significant influence on financial performance. This is evidenced by the value of tcount (0.176) greater than ttable (0.00075) or can be seen from the significance value of 0.045 < = 0.05. The investment variable has a significant influence on financial performance. This is evidenced by the investment variable tcount (0.103) greater than ttable (0.00075) or can be seen from the significance value of 0.026 < = 0.05. The funding variable has no significant partial effect on financial performance. This is evidenced by the financing variables tcount(0.003) is smaller than ttable (0.00075) or can be seen from the significance value 0.172> = 0.05. Keywords: cash flow, financial performance

Implementasi Pencatatan Keuangan Oleh Pengusaha Mikro-Kecil Di Kecamatan Ciputat

Liquidity ◽  
2018 ◽  
Vol 2 (1) ◽  
pp. 66-72 ◽  
Author(s):  
Ermalina Ermalina
Keyword(s):  
Cash Flow ◽  
Small Businesses ◽  
Cash Flows ◽  
Financial Reports ◽  
Financial Report ◽  
Descriptive Qualitative

The objectives of the study are to analyze the implementation of financial report (cash flow) by micro and small businesses in Ciputat Tangerang Selatan. The method used in this research is descriptive-qualitative. The result shows that the most of micro and small businesses of the (44.5%) do not have financial reports (cash flows). As for the rest, 33.3% of respondents have financial report and 22.2% of them make a report.

Analyzing the figures of consolidated statement of cash flows of the world's biggest publicly traded oil and gas corporations

2020 ◽  
Vol 19 (6) ◽  
pp. 1101-1120
Author(s):  
O.V. Shimko
Keyword(s):  
Public Sector ◽  
Cash Flow ◽  
Oil And Gas ◽  
Cash Flows ◽  
Annual Reports ◽  
Capital Expenditures ◽  
Publicly Traded ◽  
The Public ◽  
Statement Of Cash Flows ◽  
Oil And Gas Companies

Subject. The article investigates key figures disclosed in consolidated cash flow statements of 25 leading publicly traded oil and gas companies from 2006 to 2018. Objectives. The focus is on determining the current level of values of the main components of consolidated statement of cash flows prepared by leading publicly traded oil and gas companies, identifying key trends within the studied period and factors that led to any transformation. Methods. The study draws on methods of comparative and financial-economic analysis, as well as generalization of materials of consolidated cash flow statements. Results. The comprehensive analysis of annual reports of 25 oil and gas companies enabled to determine changes in the key figures and their relation in the structure of consolidated cash flow statements in the public sector of the industry. It also established main factors that contributed to the changes. Conclusions. In the period under study, I revealed an increase in cash from operating activities; established that capital expenditures in the public sector of the industry show an overall upward trend and depend on the level of oil prices. The analysis demonstrated that even integrated companies’ upstream segment prevail in the capital expenditures structure. The study also unveiled an increase in dividend payments, which, most of the time, exceeded free cash flows thus increasing the debt burden.

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