Cash Flow Analysis Research Articles

ANALYSIS OF CASH FLOWS IN THE ENTERPRISE MANAGEMENT SYSTEM

The article is devoted to the analysis of cash flows in the enterprise management system. The concept of "cash flow" is considered, which is an important subject of management, which is presented in non-cash and cash forms, the direction of which is related to the functioning of money and the monetary system, the stage of managing the company's monetary calculations. In the analysis of monetary calculations, the main goal is to determine the reasons for the deficit or surplus of monetary resources, the order of their receipt and the direction of spending in order to control the current solvency of the enterprise. The following methods are used to determine cash flows: indirect and direct. They differ in a different sequence of actions by which the size of the flow of cash is estimated. The movement of cash means the breakdown of incoming and outgoing cash flows in the development of operational, investment and financial activities of a business entity. The flow of cash from operational and financial activities was analyzed. It was determined that an important area of ​​activity of the company's management, especially in periods of financial crises, is the management of cash flows. The dynamics of cash flow according to the sources of their formation are analyzed. It has been proven that the flow of funds from the main activity correlates with current operations, which include revenue from sales, payment of supplier invoices, receipt of short-term credits and loans, payment of wages, settlements with the budget. The flow of cash from operational and financial activities was analyzed. We consider the management of cash flows, which are detailed in monetary calculations, to be the most important activity of the company's management, especially in periods of financial crises, therefore, the reasons for the importance of such an asset, such as cash, have been determined. Disadvantages revealed after monitoring cash flows. In order to improve the cash management system, we suggest implementing a control formation that will ensure the consolidation of control actions, its concentration on the determined course of the company's financial activity, timely disclosure of deviations of the actual results from the expected ones, and the formulation of operational management decisions that will ensure its normalization.

Wealth maximisation and residential energy-efficiency retrofits: Insights from a real options model

The slow adoption of residential energy-efficiency retrofits continues to hamper the energy transition. We study incentives for adoption by proposing a model of optimal investment under uncertainty where the wealth-maximising agent has the option to delay. Stochastic portfolio returns and energy prices are taken into account. An extension of the model where the energy carrier is switched, e.g. from gas to electricity, is also considered. Exercise boundaries for the optimal stopping problem are estimated numerically for recent case studies of German buildings. Investment is generally not optimal at current energy prices and market conditions. Increasing correlation between gas and electricity prices erodes the value of technology switching. Comparative statics reveal that energy-efficiency investments become optimal at relatively lower energy prices as wealth, income, and savings behaviour increase, and portfolio drift and volatility decrease. Consequently, incentive to invest in retrofits is far more heterogeneous along wealth dimensions than standard discounted cash flow analyses suggest. An examination of retrofit subsidies demonstrates how free-riding by wealthier agents occurs when subsidies are not appropriately targeted. We also show that the pursuit of economic efficiency in subsidy design might have regressive effects on the wealth distribution.

MÉTODOS PARA ANÁLISE DE INVESTIMENTO: APRESENTAÇÃO TEÓRICA E PRÁTICA

This work aims to present the most commonly accepted methods for investment analysis, namely Net Present Value (NPV), Payback – with simple and discounted cash flow, Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR). Conceptually, the work presents MIRR as an evolution of IRR, aiming to correct inherent problems with IRR, such as the analysis of cash flows with sequential positive and negative peaks, where the IRR method would generate multiple rates instead of a single rate for the project. This article also introduces the concept of the Average Attractiveness Rate. The study methodology used is bibliographic research, presenting the concept, theory, and application of each method while attempting to differentiate them. In the end, a practical example with values is presented, where a manager, in deciding whether or not to invest, considers the use of investment analysis methods for decision-making regarding the trade-off.

Optimal Replenishment Strategy for a High-Tech Product Demand with Non-Instantaneous Deterioration under an Advance-Cash-Credit Payment Scheme by a Discounted Cash-Flow Analysis

This study investigated non-instantaneous deteriorating items because not all products deteriorate immediately. In the high-tech product life cycle, the product demand increases linearly substantially in the growth stage and maintains a near-constant level in the maturity stage. This is a ramp-type demand rate. To satisfy the demand as shortages occur, partial backlogging is necessary. The advance-cash-credit payment scheme, comprising advance, cash, and credit payments, has gained popularity in business transactions to improve cash flow flexibility among supply chain participants. This study explored a partial backlogging inventory model with ramp-type demand for non-instantaneous deteriorating items under generalized payment. The proposed model also incorporated discounted cash flow analysis to account for the time value of the profit function. This study attempted to determine the optimal replenishment strategy to maximize the present value of the total profit. Finally, we conducted a sensitivity analysis to examine the efficacy of the proposed model and gain managerial insights. The optimal total profit rises with an increase in the permissible delay period and sale price but decreases with an increase in ordering and purchase costs. Then, the decision-maker can refer to the managerial insights to choose the appropriate parameter value for the operation.

Profiles and analysis of cash flows in enterprises: on the example of an enterprise in Kazakhstan and Turkey

Object: The aim of this research is to conduct a comparative analysis of the cash flow statements of the largest air lines in Turkey and Kazakhstan over the period 2019–2023, using the cash flow dependent activity model. Methods: The study utilized the cash flow transaction model proposed by Gup et al., which serves as a complementary model for estimating financial data derived from cash flow statements. Findings: The article discusses the cash flow statement, its significance, presentation, and reporting, as well as the definition of a business model on which cash flows depend and an explanation of eight different models. It also analyz es the cash flow statements of some of the largest airlines in Turkey and Kazakhstan over the period 2019–2023 and presents the results. Based on the analysis, it concludes that the airlines under study fit the profile of Model 2, indicating a successful business model. Conclusions: When analysed, it is evident that the cash flows of the companies in the study primarily follow Model 2 (+, -, -), which is recognised as the most successful business model. The cash flow profile of successful businesses (+, -, -) ranks first in this study, as it does in all other studies.

Cash flow analysis: Red flag indicators of financial distress in Malaysian companies

The unprecedented coronavirus disease (COVID-19) pandemic devastated the world from early 2020 caused an economic decline impacting numerous companies worldwide, including Malaysia. Thus, companies should foresee financial distress to better prepare and establish mitigating measures for future challenges. One method to examine the financial situation of a company is by investigating the cash flow information. The study aims to investigate the relationship between cash flow patterns and financial distress. Data were gathered from 24 public listed companies in Bursa Malaysia from 2009 to 2019 and the study applied the binary logistic regression and chi-square analysis test for independence. The results indicated that companies with a negative cash flow from operating activities would more likely experience financial distress due to the inability to generate sufficient cash to cover operations, future investment, and long-term debt. Additionally, distressed companies tend to discard fixed assets/investments, or drawdown borrowings to relieve the cash deficit.

Optimization of a proposed biomass generator: Harnessing citizen waste with electric vehicle charging infrastructure

Global municipal solid waste production is rising, causing significant environmental, health, and economic issues. Developed countries have advanced recycling technologies, but cities like Dhaka, Bangladesh—among the most densely populated-struggle with inadequate waste management. This feasibility study aims to improve environmental protection and create new energy sources by proposing a waste management system across Dhaka, focusing on waste valorization for bioenergy with optimized efficiency and minimal impact. The study includes design and optimization of a biomass-based power plant to meet the energy needs of EV charging stations and the national grid, evaluating its economic performance through discounted cash flow and payback period analyses. The paper explores the integration of an EV charging station powered by biogas, addressing the growing need for EV infrastructure in Dhaka. By evaluating biomass generators as a greener alternative to fossil fuels, the study analyzes the technical, economic, and environmental feasibility, including CO2 emissions, using HOMER Pro.

Analyzing the Influential Factors of Valuation: A Case Study on Taiwan Semiconductor Manufacturing Company

During the Artificial Intelligence (AI) revolution, the semiconductor industry saw unprecedented demand, driven mostly by the need for more powerful computational technology. This study examines the value impact of AI breakthroughs on Taiwan Semiconductor Manufacturing Company (TSMC) using a rigorous Discounted Cash Flow (DCF) analysis. With AI technologies largely driving demand in the semiconductor business, this study adapts classic financial modeling approaches to capture the subtle implications of technical advancements on firm valuation. Using substantial financial data from TSMC, the research modifies growth rates to reflect AI-driven market potential, while also incorporating cautious forecasts to allow for industry volatility. The findings indicate that the market may undervalue TSMC, implying an upbeat forecast for the firm in the middle of the AI boom. The research contributes to financial academic knowledge by illustrating the use of DCF to evaluate technology influences on business values, providing important insights for investors and corporate strategists. Future refinements to the DCF model are proposed, with an emphasis on incorporating dynamic market data and policy effect research to improve investment assessments in technology.

The Effect of Sustainable Alternative Cigarette to the Valuation of PT. Hanjaya Mandala Sampoerna, Tbk. (HMSP.JK)

This research investigates the impact of sustainable alternative cigarettes on the valuation of PT Hanjaya Mandala Sampoerna Tbk (HMSP.JK), a leading tobacco company in Indonesia and a subsidiary of Philip Morris International (PMI), which is actively pursuing a smoke-free future. With growing global awareness of the health risks associated with traditional cigarettes, there has been a shift towards alternative tobacco products perceived as less harmful. This study evaluates how the introduction and adoption of these alternative products influence the company's market valuation. Using a comprehensive valuation model that integrates financial analysis, industry trends, and potential growth of the alternative cigarette market, the research applies discounted cash flow (DCF) analysis to the projected 10Y HMSP’s FCFF. The evaluation was conducted under three scenarios based on the rate of acceptance of Heated Tobacco Sales (HTU) in the market both domestic and international. In the scenario analysis, the projected stock price varies significantly depending on the rate of HTU sales. Under the most optimistic scenario (Scenario 3/10% HTU revenue mix), the stock price shows substantial upside potential up to 92% with intrinsic value of Rp. 1,297. The market price of HMSP’s share is at Rp. 675 as of August 1, 2024, which indicated that current share price is undervalued. Therefore, it is recommended for investor to buy HMSP stock at current price. Based on these insights, the Author recommends that Sampoerna’s management focus on accelerating the adoption of alternative products, navigating regulatory challenges proactively, and enhancing consumer education to solidify its market position in this evolving landscape.

Analysis of Cash Flow and Net Income on Stock Prices in Mining Companies in Indonesia

Information about a company's cash flow and net income is useful for readers of financial statements, especially investors, as a basis for analysing the company's ability to create profits because investors must see the stock price when making an investment. Based on these considerations, this study aims to examine the effect of cash flow and net income on stock prices in mining companies in Indonesia. The population of this study consisted of 19 companies, and a sample of 36 financial records from three coal mining companies was used using a purposive sampling technique. The author uses a multiple linear regression analysis method. The results showed that net income significantly affects stock prices, while cash flow has no significant effect individually. However, when considered together, both cash flow and net income influence stock prices. This study provides valuable insights for future investors and researchers by recommending sample expansion, a more in-depth literature review, and diverse research methods.

Study Case: Company Valuation and Forecasting Financial Trends at PT PP London Sumatera Indonesia (LSIP)

PT PP London Sumatra Indonesia Tbk (LSIP) is a company that has been established in Indonesia since 1906 and started its IPO in 1996 with an IPO price of Rp4.650 for each share. Even though the company’s performance is going well and the trend of palm oil consumption in Indonesia is increasing, the share price of PT PP London Sumatra Indonesia Tbk has fluctuated and even decreased when compared to the initial IPO price and share prices in the last 5 years. So this raises the question of how the company’s stock performance will be in the next few years. In this research, the author begins by analyzing the macro-environment which may have an impact on the company and industry, then the author carries out an analysis of the financial statements of the company and its competitors. Apart from that, the author also tries to forecast the company’s financial performance and then continue with company valuation analysis using the discounted cash flow method. After getting the valuation results, the author tries to see the company’s level of sensitivity using scenario analysis and also carries out capital structure analysis to find the optimal capital structure. Based on the results of financial performance analysis, Lonsum (LSIP) has better financial performance compared to its competitors except for assets turnover. And then based on the results of discounted cash flow analysis, this company is not yet worthy of being a place for us to invest. And the last based on all the results of the previous analysis, when compared with competing companies, LSIP is a company that has quite a lot of potential as a place to invest. However, currently the company still has to look for a catalyst in order to become a company that is worthy of being a place for us to invest. Based on the result, the author suggest the reader to continue to collect information related to PT PP London Sumatra Indonesia Tbk, other competitors and plantation in similar industries to find catalysts that have positive impact on the company, and invest when the company has a positive catalyst.

Optimal Profitability Analysis for Contractors Regarding Variations in Payment Systems and Scheduling

Construction projects often face higher risks than other types of projects, primarily due to potential delays from inaccurate scheduling and cash flow issues. Therefore, effective scheduling and payment systems are crucial for contractors to reduce risks and achieve optimal profitability. This study aims to identify optimal cash flow and profitability for contractors through the analysis of various payment systems and the utilization of float time. The methods used include cash flow analysis and feasibility analysis using NPV, BCR, and ROI methods. This research explores eight different payment and scheduling approaches to evaluate their impact on project profitability. The results show that cash flow across all alternatives remains positive without experiencing a shortage of funds and indicate that the contractor's optimal profitability is achieved with application of alternative 5, featuring 0% float time and no advance payments. This alternative results in the highest profit, with an NPV of Rp 15,338,960,581, a BCR of 1.059, and an ROI of 5.90%. From these results, it can be concluded that not utilizing float time leads to the most optimal profitability for the contractor. Additionally, it can be said that the scheduling plan implemented by the contractor for the Twin Tower project is well-structured. However, for the payment system, it is recommended to adopt a no-advance payment approach. It is hoped that this study will help contractors optimize their profits in the competitive construction industry.

Dynamic financial modeling and feasibility studies for affordable housing policies: A conceptual synthesis

The escalating demand for affordable housing necessitates innovative approaches to financial modeling and feasibility analysis to ensure the success and sustainability of housing policies. This abstract presents a conceptual synthesis of dynamic financial modeling and feasibility studies, exploring their pivotal role in shaping effective affordable housing policies. Dynamic financial modeling involves creating flexible and adaptive financial models that account for varying economic conditions, policy changes, and market fluctuations. These models are essential for predicting financial outcomes, assessing the viability of housing projects, and guiding investment decisions. By incorporating real-time data and scenario analysis, dynamic financial models help stakeholders understand potential risks and opportunities, enabling more informed decision-making. Key components of dynamic financial modeling include cash flow analysis, sensitivity testing, and scenario planning, which together provide a comprehensive view of a project's financial viability over time. Feasibility studies complement financial modeling by evaluating the practical aspects of affordable housing projects, such as site selection, regulatory compliance, and market demand. These studies assess the alignment of housing projects with community needs and regulatory requirements, ensuring that proposed developments are both feasible and beneficial. Feasibility studies often include market analysis, cost estimates, and risk assessments, providing a detailed understanding of project constraints and opportunities. The synthesis of dynamic financial modeling and feasibility studies offers a robust framework for evaluating affordable housing policies. It allows for the integration of financial projections with practical considerations, ensuring that policies are not only economically viable but also aligned with social and regulatory objectives. Case studies from various regions demonstrate the effectiveness of this approach in identifying successful strategies and addressing common challenges. In conclusion, dynamic financial modeling and feasibility studies are crucial tools for developing and implementing effective affordable housing policies. They provide a comprehensive understanding of financial and practical dimensions, facilitating informed decision-making and enhancing the sustainability and impact of affordable housing initiatives. This conceptual synthesis underscores the importance of integrating these methodologies to achieve long-term success in addressing housing affordability challenges. Keywords: Policies, Affordable Housing, Feasibility Studies, Dynamic Financial Modeling, conceptual Synthesis.

Valuation of cyclical assets and exit value

PurposeOrdinary direct capitalization is normally considered procyclical in its present form (De Lisle Grissom, 2011); for this reason, an alternative approach to direct capitalization may be useful in the determination of a robust opinion of value. The valuation standards propose an alternative determination of terminal value in the discounted cash flow analysis, recommending that for cyclical assets, the terminal value should consider … “the cyclical nature of the asset and should not be performed in a way that assumes “peak” or “trough” levels of cash flows in perpetuity” (IVS 105 Valuation Approaches and Methods para 50.21 lett e).Design/methodology/approachThe introduction in International Valuation Standards (IVS) of Cyclical Assets raises several questions for the community of real estate professionals and academicians (IVS, 2022, 105 Valuation Approaches and Methods para 50.09 lett d). Cyclical assets can be defined as property whose value is “influenced by upturn and downturn of the market in a significant way” (d’Amato et al., 2019).FindingsThe paper proposes different solutions to the problem. The determination of the exit value using cyclical capitalization allows for a prudent assessment of the value and may be used either as a valuation procedure or a risk analysis method.Research limitations/implicationsThe valuation comparison with the traditional valuation techniques will be based on an iteration of exit value in order to determine the effects of the valuation procedure on the opinion of value.Practical implicationsThe implication of the valuation procedure is the introduction of a countercyclical valuation method to determine the exit value in order to reach stable and reliable valuations for income-producing properties.Social implicationsThese models may have a social implication, providing valuation for income-producing properties that may deal with the property market cycle in a more efficient way, providing efficient valuation for banks and institutions.Originality/valueThe paper is the first application of such a valuation procedure to the determination of exit value.

A Study on Financial Statement Analysis of Steel Authority of India

Financial statement analysis is the process of analyzing a financial statement for decision – making purposes. External stakeholders use it to understand the overall health of an organization and to evaluate financial performance and business value There are various methods and techniques used in analyzing financial statement such as comparative statements, trend analysis, common size statement, fund flow and cash flow analysis and ratio analysis

An Evaluation of the Startup Valuation Methods

As societal interest and enthusiasm for venture capitals remains stable and strong currently, the valuation methods play a more and more important role in assisting the venture capitalists to make more informed investment decisions. Based on this background, this research will focus on two typical valuation methods. They are Discounted Cash Flow (DCF) Analysis and Venture Capital (VC) Method and the applicability and challenges of these two valuation methods in venture capital investment area will be explored. This paper will also offer both theoretical insights and practical applications to analyze these two approaches by using case studies and empirical figures. The final results of the research show that each method has its own advantages and limitations so that the choice of which method to select depends on the specifics of the startups being evaluated. Lastly, the paper will end a summary of the main points made about each of the approaches and an outlook for future research directions in venture capital valuation field.

ANALISA KELAYAKAN RENCANA PEMBELANJAAN MODAL (CAPEX) PT UNITED TRACTORS TBK (UNTR) DALAM RANGKA MENGANTISIPASI PROYEKSI PERTUMBUHAN BISNIS PERUSAHAAN

The purpose of this study is to determine the performance of PT United Tractors Tbk through cash flow analysis that can be used as a decision-making tool by company and investors. Research approach to be used is quantitative descriptive, data used for analysis is secondary data, which is cash flow reports collected from the website of PT United Tractors Tbk. Data were analyzed using 8 cash flow ratios, namely: ration of operating cash flow, cash flow coverage ratio, interest coverage ratio of the cash, the cash coverage ratio of current liabilities, capital expenditure ratio, the ratio of total debt, the ration of net cash flow and free cash flow adequacy ratio. The results of the analysis indicate that the company's financial performance from 2017 to 2021 ratio generated tends to be deprived, where it seen from 5 ratios are on low average

CAPITAL BUDGETING

The project talks about a capital budgeting and its methods including discounted cash flow, payback, and throughput analyses. The process involves analyzing a project’s cash inflows and outflows to determine whether the expected return meets a set benchmark, we are going to talk about how capital budgeting is also important for small and big companies to evaluate major projects and investments, such as new plants or equipment. In the present scenario the efficient allocation of capital resources is a most important function of project management. This function involves firm’s decision to invest its funds in long-term assets like plant, machinery land, building, equipment etc. These assets are extremely important to the firm because the organizational profits are derived from the use of its capital investment in assets which represent a long-term commitment of funds. The future development of an enterprise depends on the capital investment projects. These projects may be the replacement of existing capital assets which turns out to be less attractive to the firm or expansion of business for implementing new ideas and planning. Thus, long term investment decisions of an enterprise fall within the definition of project budgeting or capital expenditure decisions. These decisions are concerned with the acquisition of assets in which funds will be invested by an enterprise. The assets of business include long term assets and short-term assets. Long term assets will yield a return over a period of time whereas short term assets are those assets which are easily convertible into cash within one accounting period, normally a year. The long-term investment decision is known as project budgeting/capital budgeting and the short-term investment decision are identified as working capital management.

Photovoltaic and Solar-Thermal Use Case Application Comparison with Witness Simulation and DCF Analysis

In this work, we investigate a system of solar and thermal heat collectors in combination with local and electric net storage. The system is implemented in a Witness Horizon simulation model, allowing for the investigation and scenario analysis of different use cases. In a practical industrial application example use-case, using simulation and Discounted Cash Flow (DCF) analysis, the economic feasibility of the best system variant could be calculated. The developed model includes the local consumption and production profile and it was evaluated by a DCF model after the dynamic energy modelisation with the generic industrial production system simulation software WITNESS Horizon. This model can be in future further extended to generic and more complex production systems, simultaneously integrating the DCF cost evaluation analysis and following direct economic optimisation as well as integrating it with the production portfolio theory approach by integrating diversified virtual production market aspects and market goal-oriented optimisation.

Profitability dynamics of offshore wind from auction to investment decision

Offshore wind auctions in Europe have recently seen considerable price decreases, with resulting support levels low enough to warrant the question whether project profitabilities are robust enough against changing market prices, or whether project suffer from low returns upon project realisation. This study investigates the development of profitability between auction date and Final Investment Decision, mainly through identifying impacts of changes in electricity prices, using stochastic discounted cash flow analysis. Some projects seem to have experienced adverse market developments. The study employs an explanatory-sequential approach to analyse two strategies to mitigate this risk: Pricing risks into the auction bid and absorbing losses through reduced returns or, alternatively, passing them down to contractors in the supply chain. The study finds indications that post-auction market developments have likely led to diminishing returns of developers, rather than increased price pressure on contractors. The study enhances the understanding of project profitabilities and developers’ choices between auction and investment decision, and therewith opens the discussion on post-auction industry dynamics as an increasingly relevant factor to ensure that offshore wind can live up to its envisaged role in the decarbonisation of society.