Cash Profitability Research Articles

Cash profit sharing and labour productivity in family firms: Exploring the effects of R&D and capital intensities

ABSTRACT While equity-based employee incentives can positively affect labour productivity in family firms, our understanding of the effect of nonequity-based employee incentives remains limited. Integrating expectancy theory with the socioemotional wealth preservation literature, our study investigates the impact of cash profit sharing (CPS) on family firms’ labour productivity. Specifically, CPS is viewed as a motivational device for enhancing labour productivity in family firms, as family firm employees will have high expectancies, instrumentalities, and valences towards CPS. Moreover, R&D and capital intensities are explored as strategic contexts for further determining CPS effects on labour productivity in family firms. The findings lend support for CPS having a significant, positive impact on family firms’ labour productivity, and demonstrate a three-way interaction indicating that the strongest, positive effects of CPS on family firms’ labour productivity occurs when R&D intensity is high (versus low). However, our prediction of a three-way interaction involving capital intensity was not supported.

Rescue of the Material Recycler: A Case Study on the ‘End-of-Life Tyres’

Tinna Rubber and Infrastructure Limited (TRIL) is India’s largest integrated material recycler of end-of-life tyres (ELT). It imported 70% scrap to feedstock in its manufacturing plants. The nationwide lockdown declared on 24 March 2020 posed severe initial restrictions on the movement of non-essential cargo. It affected TRIL’s 265 containers lodged at different ports in the country, thus escalating their demurrage/detention charges and storage costs. This case concerns supply chain problems faced by Shanti Swarup, TRIL Head–Procurement, owing to COVID-19 disruption. The situation was severe enough to wipe out TRIL’s annual cash profit and put its factories at risk of running out of feedstock. Scrap importers, like TRIL, were in a deadlock with shipping lines and freight stations to waive any imposed charges or avail of any monetary relief despite regular guidelines issued by the Indian government. However, Swarup’s existing and effective ‘supply chain resilience’ strategies had already made TRIL win half the battle by adopting a different approach to the deadlock problem, which relieved the situation. The case study also highlights typical risks and challenges faced by the Indian ELT recycling industry.

Making of a capitalist frontier: tobacco cultivation and changing agrarian relations in the Chittagong Hill Tracts, Bangladesh

Bangladesh’s Chittagong Hill Tracts (CHT) were mainly covered with forest and interspersed jhum—shifting cultivation—plots until the beginning of the British colonial period in 1760. Since then, policy interventions undertaken by the state regimes to govern and regulate the indigenous people and maximize the extraction of natural resources gradually transformed the region into a capitalist frontier. Consequently, the operation of large-scale tobacco companies in the CHT during the last two decades radically reconfigured indigenous peoples’ relationship with the land and the state. Analytically, in this article, we explore: Who has access to what? Who does what? Who gets what? And what do they do with it? Our ethnography reveals that agrarian changes via tobacco cultivation in the CHT included converting communal lands into private property, contract farming, land control polarization, and labor commodification. Despite emerging precarity, the indigenous people identified tobacco cultivation as a way to earn cash profits to build a life “free” from their inferior status—historically linked with their Pahari identity. Overall, our ethnographic findings problematizing the presumption that indigenous people evade “state spaces” to preserve their autonomy suggest that the CHT became a capitalist frontier embodying “zones of potential” and generating competing interests, actors, and imaginations.

A two-stage credit scoring model based on random forest: Evidence from Chinese small firms

Small firms are major contributors to most economies, often supported by government policies. However, the credit scoring of small firms is complicated and costly, making it a challenging field of research. Using loan data from 3045 small firms in China, we design a two-stage expert system for default prediction that quantifies the variables and thresholds that have a key impact. Firstly, we use SMOTE to deal with the imbalanced data and secondly, we employ random forest to build predictive credit features. Dominance analysis shows that, when making default assessments on Chinese small firms, it is important to consider not only financial factors, but also non-financial and macroeconomic factors. In particular, the net cash profit, the firm's legal disputes and the per capita disposable income of urban residents are key factors in credit scoring. Robustness tests show that our proposed methodology performs better than other machine learning models, and this result is robust with observations from other countries.

Intergroup Cooperation in Shotgun Hunting Among BaYaka Foragers and Yambe Farmers from the Republic of the Congo

Whereas many evolutionary models emphasize within-group cooperation or between-group competition in explaining human large-scale cooperation, recent work highlights a critical role for intergroup cooperation in human adaptation. Here we investigate intergroup cooperation in the domain of shotgun hunting in northern Republic of the Congo. In the Congo Basin broadly, forest foragers maintain relationships with neighboring farmers based on systems of exchange regulated by norms and institutions such as fictive kinship. In this study, we examine how relationships between Yambe farmers and BaYaka foragers support stable intergroup cooperation in the domain of shotgun hunting. In the study village, shotgun hunting is based on a specialization-based exchange wherein Yambe farmers contribute shotguns and access to markets to buy cartridges and sell meat while BaYaka foragers contribute their specialized forest knowledge and skill. To understand how costs and benefits are distributed, we conducted structured interviews with 77 BaYaka hunters and 15 Yambe gun owners and accompanied hunters on nine hunting trips. We found that hunts are organized in a conventional manner within a fictive kinship structure, consistent with the presence of intercultural mechanisms to stabilize cooperation. However, because bushmeat demand is high, gun owners can gain significant cash profit, while compensating hunters only with cigarettes, alcohol, and a traditional hunter’s portion of meat. To level payoffs, hunters strategically hide kills or cartridges from gun owners to feed their own families. Our results illustrate how each group prioritizes different currencies (e.g., cash, meat, family, intergroup relations) and provide insights into how intergroup cooperation is stabilized in this setting. The example of this long-standing intergroup cooperative system is discussed in terms of its contemporary entwinement with logging, the bushmeat trade, and growing market intersection.

Model Comparison with Transaction Costs

ABSTRACTFailing to account for transaction costs materially impacts inferences drawn when evaluating asset pricing models, biasing tests in favor of those employing high‐cost factors. Ignoring transaction costs, Hou, Xue, and Zhang (2015, Review of Financial Studies, 28, 650–705) q‐factor model and Barillas and Shanken (2018, The Journal of Finance, 73, 715–754) six‐factor models have high maximum squared Sharpe ratios and small alphas across 205 anomalies. They do not, however, come close to spanning the achievable mean‐variance efficient frontier. Accounting for transaction costs, the Fama and French (2015, Journal of Financial Economics, 116, 1–22; 2018, Journal of Financial Economics, 128, 234–252) five‐factor model has a significantly higher squared Sharpe ratio than either of these alternative models, while variations employing cash profitability perform better still.

Implementasi Sistem Informasi Manajemen Masjid Berbasis Web


 
 
 The mosque is a place of worship for Muslims. The mosque plays an important role as the center of Muslim activities. However, behind the mosque's very important role in social activities, it is not balanced with the needs of today's modern society. Therefore, this study implements a management information system (MIS) in mosques. This study resulted in a mosque SIM which was developed on a web-based basis so that it was easily accessible and the software development method used the waterfall so that the SIM that was built was quickly resolved and the development process to implementation and hosting. The features for mosque SIM visitors: information on the call to prayer/prayer schedule, parameter information (qibla direction), financial data information (incoming and outgoing), information on mosque donations/alms, and contact information for contacting the mosque SIM manager. Admin features: manage mosque staff data (create, edit and delete), input data types for donation/alms categories, backup and restore SIM, print officer data, and view the history of what activities have been done by the admin. Officer features: managing activity agendas, managing mosque funds (transfer confirmation, mosque cash profit, income data, expenditure data), and managing report management that will be used as a reference for making decisions/policies. The mosque SIM is expected to help and facilitate mosque officials and administrators in managing mosque activities and finances.
 
 

Beyond the short-term: the effects of broad-based employee ownership on labor productivity in family and nonfamily firms

PurposeThis study investigates whether broad-based employee ownership (BBEO), in isolation and in conjunction with cash profit sharing (CPS), can enhance labor productivity in family firms over nonfamily firms.Design/methodology/approachHypothesis testing was conducted using cross-sectional time-series regression with a matched sample of 393 family and nonfamily firms listed on the US S&P 500 over a five-year timeframe.FindingsOverall, the findings indicate that BBEO does not increase labor productivity more in family firms compared to nonfamily firms in the short term; however, BBEO does enable family firms to experience greater labor productivity relative to nonfamily firms beyond the short term. Moreover, when BBEO is combined with CPS, labor productivity improves more for family firms than nonfamily firms both in the short term and beyond.Originality/valueWhile prior studies have relied largely on agency theory, this study contributes to the literature on family firms and employee incentives by being amongst the first to draw upon temporal motivation theory to distinguish between family and nonfamily firms regarding the incentive effect of BBEO on labor productivity.

Analysis Of The Effect Of Net Profit, Operational Cash Flow, Free Cash Flow, Previous Year Cash Dividends On Cash Dividends In The Indonesia Stock

This study aims to determine the analysis of the effect of net income, operating cash flow, free cash flow, cash dividends in the previous year, on cash dividends. This study uses a food and beverage sub-sector research design. The research population amounted to 18 companies for 5 years from 2014-2018 and were picked up by 7 companies in a row to publish their financial statements. The method used in this data analysis using multiple linear regression analysis. Based on the results of the study, it can be concluded that: net income has no effect on cash dividends, operating cash flow has no effect on cash dividends, free cash flow has no effect on cash dividends, previous year's cash dividends have an effect on cash dividends.recommendations The company should pay attention to the cash dividend payments in previous years as an independent variable that affects the current year's cash dividend. Because the company will be attractive to shareholders whose preferences are related to dividend payout and stability. Investors want a stable dividend as a source of income embedded in shares that are paid the same amount of dividends every period. For further researchers, it is better to add the number of samples in the observation period of 6 years or 7 years, adding other variables such as Analyzing the relationship between Net profit, Operating Cash Flow with cash dividends, or Effect of accounting profit, cash profit, Free Cash Flow, Operating Cash Flow, leverage and current ratio to cash dividend. and can expand the research sample, not only to manufacturing companies but to more than one type of company.

PENGARUH LIKUIDITAS, SALDO LABA DAN ARUS KAS LABA TERHADAP NILAI PERUSAHAAN MANUFAKTUR

The study aims to investigate a model of likuidity, Retained Earning, Profitability cash Flow influence to firm value listed in Indonesia Stock Exchange 2018-2020 from publication of quartedly financial statement. Liquidity, retained earning and cash flow of profitability called internal source funds. Our study provide pecking order hypothesis which prefer internal source funding to increase firm value. The study uses regression analysis and logit analysis. The beneficial of research such as supporting model of financial contraits and their impact to firm value. The study found that liquidity, retained earning and cash flow of profitability have positive simultaneously significant to firm value, meanwhile liquidity and cash flow of profitability partially have positive significant to firm value at 0,05 significant level and retained earning have partially positive significant at 0,10 level. The results can be used by management to manage financial constrait.

Do firm characteristics affect debt capacity? Evidence in CEO succession

ABSTRACT Should firms decrease or increase their debt capacity after professional CEO succession? Examining a sample of all publicly traded firms from 1991 to 2016 in Taiwan, this research finds that firms with professional CEO successors tend to raise less debt and consider the succession of professional managers to be more conservative because they are afraid of being monitored more severely. From the perspectives of firms’ characteristics, those with professional CEO successors and high cash holdings and investment levels are more likely to increase their debt capacity, while those of a larger size and higher post-succession profitability volatility decrease their ability at raising debt. Finally, we hand-collect data and develop a novel method to identify the real founders and reconfirm our empirical evidence. Our findings present financial implications for boards of directors which they can evaluate firms’ cash holdings, investment level, firm size, and profit volatility before deciding on whether to name a CEO successor to take over their firms.

ANALISIS PERPUTARAN KAS DALAM MENILAI RETURN ON ASSET PADA PT. PRASIDHA ANEKA NIAGA, Tbk

The research aim to find out how cash turnover in assessing profitability is measured with return on asset. Object of this research PT. Prasidha Aneka Niaga, Tbk. in 2014-2018 periode. The research is a research of two variables. The independent variable is cash turnover while the dependent variable is profitability. The method used is descriptive qualitative analysis. The analysis technique used is teh technique of cash trunover analysis and profitability analysis that measured with return on asset. Based on the calculation of cash turnover analysis, the results of the cash turnover at PT. Prasidha Aneka Niaga, Tbk for the period of 2014 - 2018 from year to year experiencing fluctuations in cash turnover, but when viewed from industry standards is very good value, because it has a turnover of above ten times each year. For the profitability of PT. Prasidha Aneka Niaga, Tbk also experiences profitability fluctuations every year, if viewed from the industry standards in 2014, 2016 and 2017 is good, while for 2015 and 2018 it is very good. Based on a comparative analysis of cash turnover and profitability over the past five years an average of 20.75 times for cash turnover, while for profitability of 5.62%. It can be interpreted that 20.75 times cash turnover will be followed by 5.62% profitability. And the rest is followed by other factors that did not contribute to this study. From the result of the analysis at PT. Prasidha Aneka Niaga, Tbk over the past five years an average cash trunover of 20,75 times has been found which is very good. Whereas for profitability measured by the retun on assets (ROA) approach, a five years average of 5,63% is good.

Impact of Coronavirus (Covid-19) Pandemic on Small and Medium Businesses in Edo State

The study assessed the impact of Coronavirus (COVID-19) pandemic on business in Edo State, Nigeria. It determined the effect of the pandemic lockdown on sales volume, cash flow and profit margin of small and medium business owners amidst covid-19. 1119 business operators constituted the study population and a sample size of 235 respondents were purposively selected. Four research questions gave focus to the study. A 40-item structured questionnaire was used to elicit information from the respondents. The descriptive survey research design gave credence to the study. A reliability coefficient value of 0.79 was obtained with the use of Cronbach Alpha formula. The research questions were answered with mean and respondents’ homogeneity determined with standard deviation. The result of the findings revealed that COVID-19 impacted negatively on sales volume, business cash flow and profit margin. It was concluded that Covid-19 as an unforeseen circumstances that was contingent truncated business growth and rendered many liquidated. It was therefore recommended that business owners should engage in more online business transaction to increase sales volume, facilitate increased steady cash flow and maximize profit amidst Covid-19 as well as develop other strategies to enable their massive savings to surmount crises that could be contingent and inimical to their businesses Keywords: Impact, Coronavirus (Covid-19), Small and Medium Businesses and Edo State DOI: 10.7176/EJBM/13-8-03 Publication date: April 30 th 2021

INFLUENCE OF LIQUIDITY ON FIRM PROFITABILITY, A CASE OF INVESTMENT FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE (NSE), KENYA

ABSTRACT Liquidity and firm profitability are the critical indicators of the performance of firms in any given sector. Liquidity ratios such as current ratio, cash ratio and quick acid test ratio are used to measure the ability of a firm and meet its short-term maturing obligations. Margin of safety is determined by the level of the ratio. Profitability ratio are concerned with the relative profit and efficiency of utilization of service resources of a business. This study was guided by three specific objectives; the correlation between the current ratio and profitability of investment firms listed in (NSE),Kenya, the correlation between the quick acid test ratio and profitability of investment firms listed in (NSE),Kenya and the correlation between the cash ratio on profitability of investment firm listed in NSE Kenya .Return on Assets (ROA) and Return on Investment (ROI) were used as measures of the performance of listed investment firms in (NSE),Kenya. The study adopted a descriptive research design. The population of the study consisted all the investment firms listed in (NSE).The sampling technique was non-probability sampling technique for the all the investment firms listed in (NSE).The secondary data in the form of the annual reports and Accounts for the years 2014-2018 were be used. Simple correlation analysis was used to test the hypothesis at 10% level of significance. Analysis of data was tabulated and presented using frequency tables' percentages and explanations. A multi linear regression model was used to establish the relationship between independent and Dependent variables. The overall findings of the study indicated that: There is no significant positive correlation .between cash ratio and profitability; there was no definite significant correlation between acid-test ratio and profitability; there was a significant positive correlation between current ratio and profitability. The researcher recommends that corporate entities should not pursue extreme liquidity policies at the expense of their profitability, that is, they should strike a balance between Liquidity and profitability. Key Words: Liquidity, Profitability, Performance, Margin of Safety, ROA, ROI

Model Selection with Transaction Costs

Failing to account for transaction costs materially impacts inferences drawn when evaluating asset pricing models, biasing tests in favor of those employing high cost factors. Ignoring transaction costs, the Hou, Xue, and Zhang (2015) q-factor model and the Barillas and Shanken (2018) six-factor model models have high maximum squared Sharpe ratios and small alphas across 120 anomalies. They do not, however, come close to spanning the achievable mean-variance efficient frontier. Accounting for transaction costs, the Fama and French (2015, 2018) five-factor model has a significantly higher squared Sharpe ratio than either of these alternative models, while variations employing cash profitability perform better still. More generally, these results highlight the importance of incorporating real-world concerns into financial research.

Are Corporate Governance Mechanisms, Corporate Strategy and Corporate Financial Characteristics Related to Earnings Management?

This study aims to examine the mechanism of corporate governance and several factors of corporate financial characteristics towards earnings management. Corporate governance mechanisms such as an independent board, board size, and audit committee size are expected to be able to limit management actions in carrying out earnings management. While the company's financial characteristics such as corporate strategy, company age, operating cash flow, company growth, profitability, company size and leverage are predicted to affect the earnings management. In previous studies, testing of corporate governance mechanisms and corporate financial characteristics of earnings management has been carried out, but there are still inconsistencies or debates from the results of previous studies so this study reexamined the existence of corporate governance mechanisms and corporate financial characteristics of earnings management in non-financial companies in Indonesia in period 2016-2018. The research problem in this study is whether corporate governance mechanisms such as independent board, board size, audit committee size and company financial characteristics such as corporate strategy, company age, operational cash flow, company growth, profitability, company size and leverage affect earnings management? Keywords: earnings management, corporate strategy, audit committee size, company age, operating cash flows

Financial Control Systems and Financial Systems Theory: Free Cash Flow and Profitability Nexus: a Comparative Study of Manufacturing Firms in Nigeria and Ghana

In Financial Systems, the impact of Free Cash Flow (FCF) on the performance of a company has been in the center of academic discourse in recent years. Several studies have tried to ascertain the nature and magnitude of the relationship between free cash flow and firm profitability with conflicting results coming from different scholars. The main objective of this research work was to examine the impact of FCF on the profitability of quoted manufacturing firms in the Nigerian and Ghana stock exchanges. Data were pooled from twenty (20) different companies (ten each from Nigeria and Ghana) for a period of six years (2012 – 2017). A panel data estimation model was used to measure the impact of FCF and other performance metrics on the Return on Assets (ROA), which is our chosen profitability measure. The results show a positive but insignificant relationship between FCF and ROA both for Ghana and Nigerian manufacturing firms. Also, sales growth showed a positive impact on profitability of both countries while leverage negatively impacted on profitability. with Ghana being significant at 5%. The implication of the findings of the study is that it makes no business sense for companies to keep piling up excess funds beyond that which is needed for transactional purposes. The similarity between the results from Ghana and Nigeria in most of the variables shows that the findings of this study can be generalized to other countries. Based on the findings of the study, we recommend that the management of companies should strive to keep only the minimum needed free cash flow while the rest should be invested in other projects with positive net present value

ANALYSIS OF WORKING CAPITAL AND FINANCIAL PERFORMANCE OF SHARIA BANKING INDUSTRY INMANDIRI SYARIAH BANK JAMBI

The purpose of this study is to find out working capital in an independent Islamic bank, the financial performance of an independent Islamic bank in Jambi by using a liquidity ratio analysis tool (current ratio, cash ratio) and profitability ratio (profit margin) and there is also a significant relationship between current ratio cash ratios and profit margins with working capital at the Islamic bank Mandiri jambi. The analytical tool used is multiple linear regression. Study the significant relationship between current ratio (X1), cash ratio (X2) profit margin (X3) as the independent variable and working capital as the dependent variable. The results of working capital analysis at the jambi independent Islamic bank have fixed assets and current assets with a total average current assets from 2016 to 2019 of Rp 88,919,015.5 and for average fixed assets from 2016 to 2019 of IDR 856,841.06. Analysis results Financial performance through liquidity ratios namely current ratio and cash ratio obtained an average current ratio from 2016 to 2019 of 115.67%, and obtained an average cash ratio from 2016 to 2019 of 1.55%. For profitability ratios namely profit margins can be obtained an average profit margin from 2016 to 2019 of 72.82% with very good criteria because it exceeds the maximum limit of the standard ratio. The test results on the relationship of the current ratio, cash ratio and profit margin with working capital obtained a person correlation current ratio of 1,000 means perfect correlation and there is a relationship between the current ratio with working capital. For cash ratio with a person correlation value of cash ratio of 1,000 means perfect correlation and there is a relationship between cash ratio and working capital. For the value of person correlation margin of 1,000 means that it means perfect correlation and there is a relationship between profit margin and working capital. It can be concluded that working capital influences the current ratio, cash ratio and profit margin.

Corporate life cycle and cash holding decisions: A South African study

The resource-based view theory suggests that as firms’ resource bases differ along the corporate life cycle, even corporate policies such as cash holdings vary along the life cycle. This study seeks to understand the effect of firm’s life cycle on corporate cash holding behavior. Previous literature has sought to investigate the firm and institutional determinants of corporate cash holdings. Using the resource-based view theory, this study investigates whether corporate life cycle can be another determinant of corporate cash holdings. A panel data analysis of a sample of 112 Johannesburg Stock Exchange (JSE) listed firms from 2011 to 2018 is utilized to determine if firm’s life cycle does influence cash holding behavior. Dickinson’s cash flow analysis is used to proxy life cycle stages and control other known determinants of corporate cash holdings such as firm size, leverage, profitability, dividend payments, and growth opportunities. Contrary to other studies, this study finds no significant relationship between life cycle stages and corporate cash holdings, suggesting that corporate cash holdings for South African firms are driven by other factors other than life cycle resource allocations. However, it is found that prior year cash balances, firm size, and profitability have significant positive relationships with cash holdings. It is also found that liquid asset substitutes, leverage, and investment opportunities exert a significant and negative influence on corporate cash holdings.

PENGARUH FREE CASH FLOW DAN FINANCIAL LEVERAGE TERHADAP MANAJEMEN LABA DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

This research aimed to examine whether free cash flow and financial leverage affected profit management and whether good corporate governance as a moderating variable moderated the effect of free cash flow and financial leverage on profit management on textile and garment companies listed on the Indonesia Stock Exchange in the period 2016-2018. This study used sample of 16 companies from the textile and garment listed on the Indonesia Stock Exchange for the period of 2016-2018, and used a purposive sampling technique. Based on the results of research conduct shows that free cash flow has a negative and significant effect on earnings management. Financial leverage has a negative and not significant effect on earnings management. Good corporate governance can moderate or strengthen the influence between free cash flow and profit management. And good corporate governance can moderate or strengthen the influence between financial leverage and profit management.