Current Cash Research Articles

Optimal short-termism and liquidity management

We develop a dynamic multitasking model for a financially constrained firm that manages both current cash reserves through short-term effort incentives and firm growth via long-term effort incentives. We demonstrate that financing constraints lead to an overinvestment in short-term efforts compared to a scenario without such constraints, resulting in short-termism. In addition, we also show that both permanent and transitory shocks exert an ambiguous impact on the payout thresholds under conditions of positive correlation between the transitory and permanent shocks.

Determinants of investment activity of Russian companies in the real sector under financial constraints.

The level of accessibility to various sources of financing plays a crucial rolein formation of an investment strategy. The purpose of the article is to identify and analyse factors influencing the volume of investment expenditures of public Russian enterprises in the real economic sector with consideration to the degree of financial constraints. The research is based on division of companies into more and less financially constrained. The following characteristics were chosen as criteria for segmentation: size, age of the business and placement of corporate bonds on the exchange. A regression analysis specified similarities and differences among determinants of investment activity of more and less financially constrained companies. The key common factor that has an impact on this characteristic of organisations in both groups is investment expenditures of the previous period. Investments of more financially constrained companies have shown a strong dependence on indicators of current cash flow and capital structure. At the same time, the volume of expenses of less financially constrained companies is more influenced by the indicator of accumulated tangible assets. The results of the research may interest enterprises in the real sector when assessing the degree of their financial constraint and determining the volume of investment expenditures.

УПРАВЛЕНИЕ ЛИЧНЫМИ ФИНАНСАМИ С ИСПОЛЬЗОВАНИЕМ СТРАХОВАНИЯ И ИНВЕСТИРОВАНИЯ

The current life situation forces a person, family, entrepreneur to pay attention to their own income and expenses, so the task arises to effectively manage personal finances. This category is quite important and occupies a special place in the life of a person and his family, since determining the optimal ways to manage personal finances allows you to increase well-being. The tasks of the subjects of personal finance management are considered to reduce current cash expenditures, increase income through economic activities and conduct typical financial calculations to determine the budget. The goal of ensuring the balance of personal finances can be achieved through life insurance, property, liability business, etc.

Pricing of Credit Default Swaps from the Perspective of Credit Enhancement in PPP Projects

The difficulty in financing has become the primary obstacle in the process of promoting a public–private partnership (PPP). Asset securitization is a financial model that can exchange the predictable cash flow of illiquid PPP project assets with the current cash flow, and credit enhancement is crucial in this process. Different from the traditional external credit enhancement of PPP projects based on government guarantees, this paper introduces an innovative credit risk management tool, i.e., credit default swaps (CDS), into the process of asset securitization in the PPP model. In order to avoid opportunistic behavior caused by information asymmetry in the process of financial product transaction, a CDS trading contract between PPP project investors and risk management institutions based on the principal–agent theory and a flexible CDS pricing model is proposed. Through a demonstration case of the Leshan to Rongjiang Expressway in China, the volatility correlation among CDS contract default probability, pricing, and related factors, such as default limits, operation period, compensation amount, project investment return, investment return volatility, and PPP project investors’ expected inputs, is obtained. The study shows that (1) appropriate CDS pricing helps to generate investors’ high expected inputs and diligence with controls; (2) there is a positive correlation between the change of default limit and compensation amount, and the set value of default limit should not be too high, otherwise it may induce the increase of default probability; and (3) based on the high return on assets and moderate asset volatility of PPP projects, the probability of default of CDS contracts is low. The innovative financial mechanism developed by the principal–agent theory could enrich the credit enhancement methods in asset securities of PPP projects.

Reorienting Cash Waqf for Economic Development

Cash waqf, an initiative introduced by BWI Parepare City, initially aimed to alleviate post-Covid-19 poverty in the region. However, its implementation has proven ineffective and counterproductive to local economic development. In order to gain a comprehensive understanding of the issue, a qualitative study was conducted, consisting of interviews at the BWI Office and PCNU in Parepare City, to gather relevant data. The study aimed to provide a description of currency waqf from both a fiqh and positive law perspective, while also conducting a Maqāşid Sharia-centric analysis of the reorientation of cash waqf at BWI Parepare City. The first finding showed that cash waqf involved depositing funds in financial institutions for socioreligious purposes. However, the second finding indicated the issue with the current cash waqf implementation in Parepare City, as it lacked orientation and failed to contribute effectively to economic development. This study discusses the implications of cash waqf in facilitating economic recovery, emphasizing the need for waqf fiqh to align with concepts that genuinely benefit the people and remain adaptable to the prevailing conditions. The aim is to ensure the implementation of cash waqf in a manner that supports economic development and maintains harmony with the present circumstances

Do debt payments beget debt? Evidence from an emerging market

Do firms generate financial flexibility by retiring debt? Using Indian data, we document that firms channel approximately 39% of current cash flow to repay debt. This higher debt-cash flow sensitivity facilitates firms to maintain investment in the future. Firms prioritise reducing dependency on external finance, increasing investments, and saving cash in the short run. In the long run, firms enhance investments primarily through borrowing. Unlike in developed markets, we find that Indian firms respond symmetrically to positive and negative cash flow shocks by changing their borrowing.

VAT Retention and Tax Rebate and Enterprise Innovation

the enterprise is a country's innovation main body, manufacturing enterprise is innovation highland, enterprise independent innovation ability is the key to the implementation of innovation driven development strategy, VAT as the main body of the current tax system in China tax, the influence of the policy changes on the enterprise is huge, VAT tax rebate policy as an important part of a new round of tax reform, will increase the current cash flow, may encourage enterprises to make more innovation. This paper takes the release of the Ministry of Finance and the State Administration of Taxation 2018) No.70 of the Ministry of Taxation in 2018 as the research background to study the impact of the VAT rebate policy on enterprise innovation. Through the summary and comment of the previous literature and combining with the existing exploration results, this paper discusses the possible impact of the implementation of the tax rebate on the innovation of manufacturing enterprises. According to the different characteristics of enterprises, it also puts forward the heterogeneous hypothesis based on the financing constraints, the difference of geographical location and the difference of enterprise property rights. The following several hypotheses are proposed in this paper. H1: Manufacturing enterprises that enjoy the tax rebate policy are more willing to innovate. H2: Compared with the weak financing constraints, the enterprises with strong financing constraints are more willing to innovate after enjoying the tax rebate policy.

Regulations, Bank Stability Measures and Stock Market

Regulations directed at bank stability affect the entire financial system because of the strategic role banks play in the economy. The impact of regulations on bank performance have been examined. However, the use of bank regulatory stability indicators and aggregate financial regulatory instruments to account for stock market returns in Nigeria post-global financial crisis is limited, which is the gap this study seeks to fill. Data for this study was collected from investigated banks’ audited annual reports, the Central Bank of Nigeria Statistical Bulletin and Nigerian Stock Exchange official daily price list. Thirteen (13) banks listed in the Nigerian Exchange Limited for the 2010 to 2020 were investigated. The Difference Generalized Method of Moments was applied to the dynamic model to examine the effect of regulations, bank stability indicators on the returns of bank stocks. The Arrelano and Bond procedure was used to test for autocorrelation in the regression output, while the J.statistic enunciated by Hansen was employed to evaluate the existence or otherwise of over/under constraints in the instrumental variables incorporated in the estimation tool. E-view 9.0 econometric computer application was used for the analysis. This study found that bank liquidity ratio, an indicator of bank stability in this study positively and significance determines stock market returns. Also, capital adequency ratio, another bank stability indicator in this study positively and significantly drives stock returns. Similarly, monetary policy rate, an indicator used by the Central Bank of Nigeria to regulate aggregate liquidity positively and significantly influence bank stock returns. This study also revealed that the prescribed cash reserve ratio used by the Central Bank to regulate the capacity of banks to grant credits is negatively and significantly related to stock returns in Nigeria. This implies that a rise in cash reserve ratio limits the ability of banks to create credits, thereby reducing interest income from loans, thus reducing bank earnings. These findings imply that: (i) Investors should incorporate bank stability indicators and aggregate monetary policy regulatory instruments in their investment strategies if they hope to achieved maximum returns on investment. (ii) The regulatory authority can influence stock market performance through the concurrent utilization of bank stability indicators enunciated in Basel regulatory accord and monetary policy instruments (iii) The use of Cash reserve ratio as the regulatory instrument is potent in ensuring bank stability but it has adverse effect on bank stock returns because of its effect on interest income and earnings through its limitation on credit creations. Therefore, the central bank should reconsider the current cash reserve ratio and make it more friendly for banks' credit creation.

The COVID-19 outbreak and corporate cash-holding levels: Evidence from China.

By employing data from Shanghai and Shenzhen A-share markets for the period of 2019-2020, this paper examines the relationship between the degree of the COVID-19 pandemic's impact on firms' cash-holdings levels in China. We find that firms that are severely affected by the COVID-19 pandemic have higher current cash holdings levels, suggesting that the more positive (negative) the management tone in responding to the COVID-19 pandemic impact, the lower (higher) the firm's current cash holdings. However, future corporate cash holdings decrease considerably irrespective of the corporate sentiment towards COVID-19. The positive sentiment of each firm's management team towards the supply chain and the government policies results in a relative reduction of current cash holdings, whereas the severe impact on operating performance, especially the impact of the outbreak on the supply chain, demand, production and operations, and government policies, reduces the firm' s future cash holdings. In addition, the impact of the pandemic has increased the current cash holdings of state-owned enterprises and reduced the future cash holdings of non-state-owned enterprises. Meanwhile, companies located in a city with a higher density of population or companies that experience relatively higher competition in the industry tend to undergo a severer impact on their current and future cash holdings due to the COVID-19 pandemic. Overall, this study sheds the light on stimulating the vitality of enterprise investment and promoting the domestic economic cycle.

Analisis Kinerja Keuangan CU Betang Asi Tempat Pelayanan (TP) Kantor Pusat Di Palangka Raya

This study aims to determine the financial performance of the CU Betang Asi TP Cooperative Headquarters in Palangka Raya during the 2016 – 2018 period. The benefit of this research is as a reference in making decisions and determining future policies, especially in the field of cooperative financial performance. The variable in this study is financial performance, with a population of all financial statement data, while the sample is the balance sheet and income statement for the period 2016-2018. Data collection uses documentation and observation techniques, while the data analysis technique used is ratio analysis based on financial performance which includes liquidity ratios (current ratio and cash ratio), solvency ratios (assets to debt ratio and debt to equity ratio), and profitability ratios (return on equity and earning power). Based on the results of research on the financial performance of the CU Betang Asi TP cooperative, Head Office in Palangka Raya during the period 2016 – 2018 from the analysis of the Liquidity ratio, it has decreased, while Solvency has developed quite well in its business activities, and the Profitability Ratio at the CU Betang Asi Palangka Raya Cooperative has experienced a decline. Decreased, but cooperatives are still good enough to be able to carry out their business activities.

Coordination in a not-for-profit organisation during the COVID-19 pandemic: organisational sensemaking during planning meetings

PurposeThe authors examine how a not-for-profit organisation (NPO) coordinates NPO's actions during the coronavirus disease 2019 (COVID-19) global pandemic to remain focussed on strategic and operational goals.Design/methodology/approachThe authors conducted a live case study of an NPO as the crises caused by the COVID-19 pandemic unfolded. Drawing on a sensemaking perspective that incorporates sensegiving, the authors develop a framework of five types of organisational sensemaking. The authors analyse weekly planning meetings during which managers discussed past performance, forecast performance and the forecast duration of current cash reserves.FindingsThe authors show how three of the five types of organisational sensemaking helped to coordinate actions. The authors highlight how accounting information triggers organisational sensemaking processes; but depending on the type of organisational sensemaking, accounting information has little further role. The authors also show that the stability of decisions depends on the types of organisational sensemaking.Practical implicationsThe authors show how coordination as a management control practice is enabled by organisational sensemaking within an NPO during a crisis. Organisational sensemaking enabled the agreement of actions, which enabled coordination. Accounting practices provided trigger mechanisms to facilitate organisational sensemaking.Originality/valueSince this study is the first to examine sensemaking processes and accounting practices in coordination in an NPO in a pandemic, the authors contribute to the limited research on NPOs during crises and on the management control practice of coordination. The authors extend the accounting literature on sensemaking by showing that, whilst accounting triggers organisational sensemaking, accounting is only implicated in one type of organisational sensemaking and by revealing the different outcomes of the different types of organisational sensemaking.

DISAIN DATABASE SISTEM INFORMASI PEMBELIAN DAN PENGELUARAN KAS UNTUK PT PARAMITA BANGUN SARANA TBK

This research was conducted at a construction company that handles civil building construction services, infrastructure development, mechanical, and electrical works, PT Paramita Bangun Sarana Tbk. The background of the research is the existence of obstacles in the manual-based cash purchase and disbursement information system, where the company has problems in the process of requesting raw material purchases in projects that must coordinate with the head office. The purpose of this study is to analyze the current cash purchase and disbursement information system, as well as to design an appropriate database for the company. Data was collected by means of observation and field interviews with related employees. The results of the study are in the form of a database design that can be used to process purchase information. The proposed database design is expected to be able to assist field officers in managing the materials needed for the project.

PENILAIAN INVESTASI MODAL KERJA PADA PERUSAHAAN FINANCIAL UNCONSTRAINTS

This study identifies the assessment of investasi modal kerja in financial constraints on firm value in Indonesia. The dependent variable in this study is the value of the firm. Several components include independent variables on investasi modal kerja, such as: current income, current cash, current changes in fixed assets, current interest, current net working capital, current dividend payout ratio, next year's income, next year's cash, next year's changes in fixed assets. , the following year's interest, the following year's net working capital, the following year's dividend payout ratio. The control variable in this study is the debt to equity ratio. The sample of this study used trading companies registered in Indonesia. The results of this study are several components of investasi modal kerja in the value of firm, namely; current income and net capital for the following year.

Real Earnings Management and Firm Value using Quarterly Financial Data: Evidence from Korea

Purpose: This study examines whether real earnings management (REM) affects firm value by introducing quarterly financial data in the Korean market. Design/methodology/approach: The study employed four REM metrics as independent variables, and Tobin s Q as dependent variable. Ordinary least-squares (OLS) panel data regressions were used. To control the endogeneity issue, the two-stage least square (2SLS) regression model was implemented in the analysis. Findings: A significant negative relationship between REM and firm value was found in suspicious firms, whereas no statistically significant relationship was found in non-suspicious firms. Findings revealed that the negative relationship tends to prevail for at least two consecutive quarters. The result of 2SLS regression supports the previous findings that REM activities negatively affect firm value. Research limitations/implications: These results are consistent with the view that managers’ opportunistic behavior in terms of REM, may result in decreasing firm values. Mover, the REM effect reverberates not only in the current cash flow from operations (CFO) but also in the next period. Originality/value: Financial regulators need to review carefully the quarterly and annual financial statements to detect firms with relatively high REM activities because these temporarily increased or decreased real activities are underestimated or reversed in subsequent quarters, which reduces earnings sustainability or decreases the firms’ performance. The study suggests the implementation of a robust planning and financial-control system in firms to recognize and anticipate the earnings manipulations.

Financial Planning through the Liquidity Ratios for HDFC and SBI Banks

Financial planning and Analysis plays a vital role in the evaluation of Budget and forecasting for the future periods. One of the tools is financial planning through the liquidity ratios calculation and Analysis of the ratios. The present study concentrates on current ratio and Cash ratio of both banks for evaluating the cash fluidness. The analysis of current ratio infers about the liquidity position of the firm, which is crucial in paying short-term liabilities. The current ratio is calculated by dividing current assets with current liabilities. The current ratio is called as “current” because it includes all current assets and current liabilities for a particular accounting year. A current ratio which is less than the industry average is an indicator of risk of default and distress. A high ratio indicates that the organization is utilizing the assets efficiently. The current ratio is used as yardstick for short term solvency of the firm. A high current ratio enables the firm to cover all the current liabilities of a particular accounting year. But it is also an indicator of non efficient usage of short term assets. A current ratio of 1.5 indicates that for 1.5 current assets to 1 current liabilities. The current assets are those assets which can be converted in to cash within the specified year. The second objective of the study is to compare the liquidity stand of the banks through analysis of cash ratio’s of the selected banks. The cash ratio helps the banks to is identify the deposited amount which can be used for the credit lending purposes for an accounting year. The cash ratio is calculated by dividing cash equivalents plus cash with current liabilities. The present study is financial planning through current ratios for HDFC and SBI banks operating in India. The data is collected through the official websites of banks. The data is collected for the years from March 16 to March 20. The analysis is done through the calculation of current ratio, descriptive statistical analysis, bar charts for both the banks.

The Imagination Premium: an anticipative performance metric

PurposeThe authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage.Design/methodology/approachThe Imagination Premium metric reflects the value of a company's equity, beyond what can be readily explained by its ability to throw off cash.FindingsFor a CEO, TIP provides support for an argument that investments in future growth are well warranted.Practical/implicationsA negative TIP signals that investors will not even pay for the capitalized value of current cash flow and this usually leads to activist investors, hostile acquisition threats and C-suite turnover.Originality/valueThe article shows executives how to drive the premium investors will pay for corporate growth initiatives. One of the first things strategists can do to manage their company's TIP is a portfolio analysis that looks at how uncertain each current investment is, and whether the whole portfolio is one growth investors will reward with an increased TIP.

Target adjustment model and new working capital management performance measure: Evidence from Croatia

The paper develops a dynamic panel model of target adjustment in order to investigate the determinants of the cash conversion cycle of companies in manufacturing, trade, and information and communication industries in the Republic of Croatia for the period 2008-2015. The emphasis is on examining the significances and the speeds of the adjustment processes of the cash conversion cycles of companies subsamples by industry and size. Due to the adjustment costs, the results show that the observed companies gradually adjust their current cash conversion cycles to the target ones. In addition, these adjustments were slow, which can be explained by the predominance of the adjustment costs over the costs of being in disequilibrium. Moreover, the results of this study indicate that the rate of adjustment varies among companies from different industries and size categories. The differences in market power allow companies to change more easily the components of the cash conversion cycle. As a result, they enable faster convergence to their target levels. Besides the lagged cash conversion cycle, tested potential determinants that significantly affect the cash conversion cycles of Croatian companies in selected industries, although with different robustness, are company size, company growth, return on assets, fixed asset investments, financial leverage and the growth of the real gross domestic product. Finally, the paper presents a new measure for working capital management performance.

Operating lease obligations and corporate cash management

Our study addresses two issues overlooked in prior research: Does a firm's future operating lease obligations influence its current cash holdings? Does this relationship contribute to the temporal increase in corporate cash holdings? We provide evidence that these future obligations significantly influence a firm's cash holdings and contribute to the temporal increase in U.S. corporate cash holdings. Consequently, our findings are consistent with the options offered by operating leases to young growing firms and the effect of these operating lease obligations on the firm's operating leverage.

Corporate Liquidity and Profitability Management: A Study on Textile Industry in Bangladesh

Purpose: This study aims to identify, whether corporate liquidity has an impact on profitability management concerning the textile sector in Bangladesh. Design: This is a causal study where the dependent variable is profitability, measured by Return on Assets (ROA) and Return on Equity (ROE). For the independent variables, the study adopts the traditional liquidity variables, namely Current Ratio (CR), Liquid Ratio (LR), and Total Cash Ratio (TCR). This study is based on secondary data collected from the annual reports of selected textile companies. Here, multiple regression analysis and descriptive statistics techniques have been used to actualize the research objectives. Findings: The study shows that there is statistically insignificant impact of liquidity on profitability management. It is unlikely that liquidity has influences on profitability management among the textile companies in Bangladesh. Originality/Value: This study has empirically validated the impacts of corporate liquidity on profitability management. Therefore, the research can be helpful for cash management and increasing profitability concerning the textile sector.

Analysis of Financial Statements as Assessing the Financial Performance (Study at the Cement Sub-Sector Manufacturing Period 2016-2018)

The significant growth of the domestic cement industry has increased competition between companies, thus demanding that companies improve their financial performance. For this reason, this study was conducted on three cement sub-sector companies listed on the IDX in the 2016-2018 periods with quota sampling. Researchers using comparison method to financial performance using liquidity ratios, solvency and profitability ratios with industry standard ratios. The results showed that in terms of the company's liquidity ratio of Current Ratio (CR), Quick Ratio (QR) and Cash Ratio (CsR) of PT. Indocement Tunggal Tbk and PT. Semen Baturaja Tbk shows good financial performance since above the industry average. Meanwhile, PT. Semen Indonesia Tbk shows less financial performance since the CR, QR and CsR are below the industry average. Meanwhile, in terms of the company's solvency ratio by using Debt to Equity Ratio (DER) of PT. Indocement Tunggal Tbk, PT. Semen Baturaja Tbk and PT. Semen Indonesia Tbk shows good financial performance since the DER is below the industry average, while Debt to Assets Ratio (DAR) of PT. Indocement Tunggal Tbk and PT. Semen Baturaja Tbk shows good financial performance since the DAR is below the industry average, while PT. Semen Indonesia Tbk shows less financial performance because its DAR is above the industry average. Furthermore, in terms of company profitability by using Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM) of PT. Indocement Tunggal Tbk, PT. Semen Baturaja Tbk and PT. Semen Indonesia Tbk shows less of financial performance since the ROA, ROE and NPM are below the industry average, while from Operating Profit Margin (OPM) PT. Indocement Tunggal Tbk, PT. Semen Baturaja Tbk and PT. Semen Indonesia Tbk shows good financial performance because its OPM is above the industry average.