Net Cash Flow Research Articles

Utility Scale Ground Mounted Photovoltaic Plants with Gable Structure and Inverter Oversizing for Land-Use Optimization

The paper proposes an effective layout for ground-mounted photovoltaic systems with a gable structure and inverter oversizing, which allows an optimized use of the land and, at the same time, guarantees a valuable return on investment. A case study is presented to show the technical, economic, and environmental advantages compared with conventional “fixed-tilt” and “sun-tracking” ground-mounted photovoltaic installations. The main advantage of this solution is that it maximizes the energy produced per unit of land area used; but, also considering the economic metrics, the net present value of the proposed PV arrangement solution results in a greater annual volume of energy produced and therefore of net revenues and cash flows, and greater than the compared conventional solution with modules exposed in an optimal fixed position or which make use of sun-tracking systems.

The structuring of cash flow information as part of strategic management accounting

Subject. Considered together with assets, liabilities, financial results, cash flows give a comprehensive view of the company's position and its market value. Such estimates are important for strategic management and should be based on the reliable information, which may proceed from strategic management reporting. Objectives. I outline aspects for structuring the cash flow information as part of strategic management reporting. Methods. Practical recommendations are based on proceedings of the Russian and foreign scholars, methods of analysis, synthesis and generalization. Results. The article presents methodological principles for structuring the cash flow information, which are focused on aspects, subjects of strategic control and regulation, key strategic benchmarks of net cash flows, its balance, significance for key strategic values, as they shape the structure, content and purpose of the strategic management statement on cash flows. Conclusions and Relevance. The aspects for structuring the cash flow information help develop methodological principles for strategic management reporting and accounting and improve the quality of information supplied for strategic management. The findings are of practical significance for enhancing strategic management reporting on cash flows so as to improve the quality of available information for assessing the financial position and an increment of the market value of a company.

Persistent negative cash flows, staged financing, and the stockpiling of cash balances

Firms with negative net cash flows (NCFs) play an empirically important role in recent decades’ increase in the average cash-balance ratio of publicly held non-financial firms. Since 1971, negative NCFs have become much more pervasive, persistent, and greater in magnitude, and these patterns hold within the growing set of firms that have high intangible capital. In recent years, firms with negative NCFs tend to build cash balances through frequent equity offerings. The high cash balances tend to be transitory as subsequent negative NCFs lead firms to rapid cash-balance drawdowns, often followed by new stock sales and cash stockpiling of the proceeds. We conclude that funding needs and staged equity financing by negative NCF firms are central features of the secular rise in the average cash-balance ratio.

The Impact of Applying Corporate Governance Rules on Companies Going Concern - Applied Study on Jordanian Public Shareholding Industrial companies listed on the Amman Stock Exchange

This study aimed to examine the effect of applying corporate governance rules on going concern of 51 Jordanian Public Shareholding Industrial companies listed on the Amman Stock Exchange. The data were collected through the annual reports of these companies over the period 2011-2016 (Time Series Data). The research methodology employed content analysis of annual reports, Stepwise Multiple Regression and descriptive statistics. The findings of this study provide evidence of a positive association between corporate governance (Number of Independent Directors, Board Size, CEO Duality, and Ownership Concentration) and going concern of Jordanian Public Shareholding Industrial companies. In the same aspect the study revealed that there is positive association between corporate governance and both of return on assets and net cash flow from operating activities as indicators for going concern. The study recommends that companies should enact a standard pertaining going concern and financial forecasting. Thus, companies can take the necessary precautions to avoid financial failure that affect going concern negatively

The Impact of Applying Corporate Governance Rules on Companies Going Concern - Applied Study on Jordanian Public Shareholding Industrial companies listed on the Amman Stock Exchange

This study aimed to examine the effect of applying corporate governance rules on going concern of 51 Jordanian Public Shareholding Industrial companies listed on the Amman Stock Exchange. The data were collected through the annual reports of these companies over the period 2011-2016 (Time Series Data). The research methodology employed content analysis of annual reports, Stepwise Multiple Regression and descriptive statistics. The findings of this study provide evidence of a positive association between corporate governance (Number of Independent Directors, Board Size, CEO Duality, and Ownership Concentration) and going concern of Jordanian Public Shareholding Industrial companies. In the same aspect the study revealed that there is positive association between corporate governance and both of return on assets and net cash flow from operating activities as indicators for going concern. The study recommends that companies should enact a standard pertaining going concern and financial forecasting. Thus, companies can take the necessary precautions to avoid financial failure that affect going concern negatively

Marketing, Technical and Economic Feasibility of Pistachio Forest Cultivation in Al-Anbar Governorate

Pistachios are considered one of the trees that can withstand the desert conditions in Iraq, as their cultivation is spread in the countries neighboring Iraq.This study aimed to study the technical, economic and marketing feasibility of a project to grow an orchard of pistachios in the Anbar desert on an area of 50 acres, and the study indicated that the Iraqi market can absorb the production of about two million trees in its early ages and in the long run and after the expansion of agriculture can search for external markets. The technical indicators indicated the suitability of the desert environment in Al-Anbar Governorate for this type of investment to withstand drought on the one hand and the availability of an appropriate climate for fruit ripening on the other. The cultivation of pistachios in the deserts of Iraq is considered a long-term investment and can be considered as a saving for future generations as well as the role it plays in operating the labor force as a grove of 50 dunums can be considered a source “of future family income as it achieves an annual income of 40 million dinars Annually, investing in this type of project is based on achieving two goals at the same time. The first is additional job opportunities and the other is to take advantage of environmental impacts and as part of desertification control projects. And that this project, despite its long-term revenues, can contribute In the distant future to create additional sources of foreign currency, as well as achieving a net added value of up to 37 million dinars and its ability to recover the money invested in it in the absence of a discount in the nineteenth year and can convert the accumulated present value of its net cash flows to a positive value under a discount rate 5% up to 23 years old.

Development of scientific and methodological approach to quantitative and qualitative assessment of intellectual property management in industrial enterprises

The competitiveness, market value and income of an enterprise depend on the level of intellectual property management. Therefore, the aim of research is to develop, substantiate and test a scientific and methodological approach to a quantitative and qualitative assessment of the management of intellectual property of industrial enterprises. The originality of the proposed approach is that on the basis of the concept of "management of intellectual property" a procedure for current management has been developed, the main stage of which is a quantitative and qualitative assessment. The assessment is based on the structural and logical model, which is built according to two criteria. The criteria make it possible to determine the current state of the use of intellectual property (intangible assets) – a quantitative assessment, and the prospect of further use (intellectual potential) – a qualitative assessment. A quantitative assessment involves the calculation of indicators characterizing the state of assets, the dynamics of the impact on the market value of the enterprise, the profitability of production, which is proposed to be determined through the net cash flow from operating activities. A qualitative assessment is carried out in terms of components (information and investment, organizational and legal, economic, personnel and motivation), tools and relative indicators that characterize the intellectual potential of an industrial enterprise. The assessment is carried out using a general integral indicator, which is of practical importance, since it shows the existing level of intellectual property management and directions for improvement in the future. The approbation of the scientific and methodological approach was carried out on the example of three Ukrainian coke-chemical enterprises (CJSC Avdeevka Coke Plant, CJSC Zaporozhkoks, CJSC Yuzhkoks) of the American association SUNCOKE ENERGY, INC and the Polish association J.S.W. S.A. Group. Empirical studies for the period from 2015 to 2019 made it possible to build a scale for assessing the level of intellectual property management according to the Harrington function

Determinants of Pentagon Fraud in Detecting Financial Statement Fraud and Company Value

Purpose of this study was to analyze the determinants of fraud pentagon, namely pressure, opportunity, rationality, capability and arrogance of fraudulent financial statements and value. company. The research sample was 66 manufacturing industrial companies indicated to report financial fraud. Methods of data analysis using regression with panel data. The results showed: Positive pressure on fraudulent financial statements, the more widely used to obtain finance, making outsiders, insiders and financial targets, the greater the fraudulent financial statements; Positive opportunities for financial statement fraud. This shows that there is no factor in the false financial statements; Positive arrogance against fraudulent financial statements. This shows that as arrogance increases, fraudulent financial reports will increase.The deviation from negative financial statements to financial reports, the greater the company's profits and profits will increase in the long run; Positive pressure on firm value, the more opportunities to get gross profit margin, net cash flow, total managerial ownership, return on assets, firm value will increase; Negative company opportunities for firm value. It shows that nothing bigger and ineffective will improve company performance; Positive rationalization of fraudulent financial statements, so that the greater the ratio to get the amount of accruals to total assets, the greater the firm value; The ability to have a positive relationship with company value. This shows that the determining factor or controlling the running of the company so that the value of the company will increase; Positive attitude towards company value. This shows that increasing arrogance will increase the value of the firm; positive pressure on financial reports, greater amounts of financial information to obtain, costs from outside parties, other parties within and financial targets so that fraudulent financial statements will be greater to increase company value; Positive opportunities for financial reports. This shows that nothing is greater than the job and the ineffectiveness of a good commissioner and fraudulent financial reports will be increasingly bigger to increase the value of the company; A positive rationalization of firm value through fraud in financial statements, so that the greater the total accruals to total assets, the greater the fraudulent financial statements will increase firm value; Financial reporting capabilities. This shows that the greater the value of ownership increases through waning financial statements; Pride against corporate value from fraudulent financial statements. This shows that the more money will increase.

Stochastic Method of Discounted Cash Flows

The method of discounted cash flows (DCF) is one of the main and popular methods of economic assessment of business, which is used all over the world. However, the actual behavior of business projects evaluated by this method often differs from that predicted, and the difference can be tens of times.It should be noted that at present, the discounted cash flow method is a subject of extensive literature, but there are no analytical arguments for large discrepancies between the theory and practice of the method. The aim of the study is to provide a theoretical explanation of the forecasting errors inherent in the discounted cash flow method. The research method is related to the analysis of the traditional method of discounted cash flows, which shows that the key indicator that affects the final result is the net income for a certain period of time. Analyzing the economic content of the flows that appear in the formation of net income, we can conclude that for a trade-type enterprise, the cash flow of receipts associated with current operations is significantly random and, therefore, requires the use of stochastic description methods.The paper offers a mathematical model of the mentioned cash flow. It is assumed that the event associated with a purchase (cash receipt) is modeled on the time axis by a point with a random time of occurrence. Then, obviously, the number of points n that appear on a fixed time interval will be a random number. A justification is given for the fact that the point process is a Poisson random point process or simply a Poisson point process, in which the times of occurrence of points W1 ,W2 , ..., Wi and their number N(t) at time t are random variables. We introduce the function λ(t), which characterizes the average number of cash receipts (purchases) per unit of time. From an economic point of view, it is driven by consumer preferences of buyers, and from a mathematic point of view it is a function of the intensity of appearance of points of the Poisson process. The monetary values of purchases made by customers are described by random positive ui values which arise at the Wi moments of the occurrence of shopping events, simulate a random process of cash receipts at the enterprise.Introduction to the consideration of the random Poisson flow of business receipts and their values, which are also random positive values with an arbitrary probability distribution, is the key assumption of the work. The proposed approach allowed us to develop a stochastic model of the company’s revenues, generalize the method of discounted cash flows, obtain a number of simple ratios, and on this basis explain the growth of the method forecast error with an increase in the duration of the forecast horizon.New results of the study are the use of stochastic methods to describe business revenues and expressions obtained on this basis for the variance and standard deviation of the company’s net cash flow, depending on the number of forecasting periods. It is shown that the growth of the standard deviation of the net cash flow, i.e. the forecasting errors, is a fundamental feature of the method in this interpretation. For the initial estimates, a simple expression is obtained and corresponding graphs are given.In conclusion, it is noted that the presented graphs of the behavior of the standard deviation of the method estimates show that the estimate from below of the mentioned deviation slowly grows with an increase in the number of prediction periods and depends only on the number of periods. It is noted that this growth is calculated in relation to the first forecast period, which itself may contain errors, and it is determined only by consumer preferences. Of course, you can choose the forecast period not a month, but, for example, a year, but then the error of the first period will be significantly increased. Thus, this review makes it possible to explain some aspects of the growth of the error of the discounted cash flow method with the forecast time.

Antecedents of Equity Fund Performance: A Contingency Perspective

While the fund performance management literature has clearly documented that the fund size, fund family size, and net cash flow are important antecedents of equity fund performance, prior empirical studies have revealed mixed results that have not been adequately explained. Through the lens of the contingency perspective, we developed a conceptual model that examines how the expense ratio and management compensation as contextual factors interact with the fund size, fund family size, and net cash flow to affect equity fund performance. The empirical analyses were based on panel data including 690 equity funds in China over a 7-year period from 2009 to 2015. The results show that the expense ratio and management compensation moderate the effects of the fund family size and net cash flow on fund performance, and management compensation also moderates the relationship between the fund size and fund performance.

Supporting Operations with Financial Hedging: Cash Hedging Vs. Cost Hedging in an Automotive Industry

Financial hedging of raw material prices and exchange rates has become an integral part of many manufacturers' operating practices. Previous empirical research suggests that a desire to avoid financial distress and the affiliated curtailment in operations is one of the strongest hedge motivations. Taking the hedging motivation as given, we examine the effectiveness of two data‐driven hedging policies at mitigating financial distress in the car manufacturing industry. The first policy is the “cost hedging” policy, under which the carmaker hedges raw material and production input purchases. This policy appears to be in wide use in practice. The car manufacturer needs to trade in aluminum, steel, zinc, and plastic to achieve the cost hedge. The second policy is a “cash hedging” policy under which the firm hedges its net cash flow. To determine a cash hedging policy, the firm solves a stochastic program that minimizes its hedge cost subject to cash flow constraints. The program solution suggests that the firm needs to trade S&P500, aluminum, and zinc to implement the hedge. Our results reveal that the most critical drivers of hedging decisions appear to be demand shifts, especially demand elasticity shifts. The least important drivers are car design updates, which change the car's raw material requirements. This finding sheds light on why cost hedging, which focuses on hedging raw materials, is less effective than the cash hedging technique, which hedges both costs and demand.

PENGARUH LABA BERSIH DAN ARUS KAS OPERASIONALA TERHADAP KEBIJAKAN DIVIDEN PADA PERUSAHAAN INDEX IDX 30 YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE TAHUN 2015-2017

The purpose of this research is to analyze how much the factor of net income and operating cash flow on dividend policy proxied by dividend payout ratio on IDX Index 30 companies listed on the Indonesia Stock Exchange (IDX). The variables examined in this study are Net Income () and Operating Cash Flow () as the independent variable and Dividend Policy (Y) as the dependent variable. The sampling technique used was the purposive sampling method where the sample used in this study was 18 IDX Index 30 companies listed on the Indonesia Stock Exchange for 3 years, namely from 2015 to 2017. The analysis technique used in this study used analysis classic assumption test, multiple linear regression analysis, hypothesis test analysis and coefficient of determination analysis. Based on the results of testing using SPSS 23, the results show that (1) net income has a significant effect on the current ratio of the 30 IDX Index companies listed on the Indonesia Stock Exchange for the period 2015-2017, with a significance value of 0.03 <0.05, (2 ) net income and operating cash flow have a significant effect on the current ratio in the 30 IDX Index companies listed on the Indonesia Stock Exchange for the period 2015-2017, with a significance value of 0.01 <0.05.

Economic feasibility of implementing an infrastructure for collecting rainwater from the roof of free-stall sheds

his study aimed to analyze the economic feasibility of implementing and using the necessary infrastructure to collect rainwater from the roof of free-stall sheds in a dairy production system in southern Minas Gerais, Brazil. Specifically, the total cost (TC), total operating cost (TOC), and actual operating cost (AOC) of a cubic meter of rainwater and the break-even point in cubic meters were estimated. The research was conducted from January to December 2017 on a property located in the south of Minas Gerais. The following MOP scenarios were analyzed: most likely (Scenario 1), optimistic (scenario 2), and pessimistic (scenario 3). The grant value of the Das Velhas River basin was considered for the most likely scenario, as it has the most similar value with that of the basin surrounding the Furnas reservoir, in which the property is inserted. The grant value for water collection and consumption from the Paraíba River basin was considered in Scenario 2, as this Federal basin has the lowest grant value. The grant value for water collection and consumption from the Piracicaba, Jundiaí, and Capivari river basins was considered in Scenario 3, as these basins have the highest prices for the cubic meter of the collected and consumed water. The implementation of the infrastructure for collecting rainwater from the roof of free-stall sheds under the studied conditions was economically unfeasible for all scenarios, with negative net present values (NPV). Simple and discounted paybacks were longer than the proposed horizon. The internal rate of return (IRR) could not be estimated due to the negative values of the net cash flow. The benefit-cost ratios (BCR) were unsatisfactory (lower than 1). The TC values for rainwater collection from the roof of free-stall sheds were R$ 23,206.59 and R$ 20,489.25 for scenarios with interest rates of 8.50 and 6.99%, respectively, while the TOC value was R$ 7,850.30 for all analyzed scenarios. The unit values for TOC and AOC were R$ 9.9024/m3 and R$ 1.3060/m3 of collected water, respectively. The break-even point could not be estimated in the studied scenarios, as the variable cost per cubic meter of water collected from the roof of the free-stall shed was higher than the grant value charged by the water management committees of the different studied basins.

Modeling and Management of Power Supply Enterprises’ Cash Flows

The purpose of the study is to assess the efficiency of cash flow management at power supply companies of the CIS (Commonwealth of Independent States) countries. A methodological approach to cash flow forecasting with the use of linear and polynomial regression has been developed. The study is based on the data provided by 12 power supply companies operating in CIS member countries. Forecasting based on the generated polynomial models of multiple regression of cash flow for the power supply companies under study confirms the strong possibility of extrapolating the studied trends to future periods. Compared to the linear model, the polynomial one confirms higher values of the determination coefficients for the majority of power supply companies. The projected volumes of cash inflow, cash outflow, and net cash flows of power supply companies with the application of the described polynomial multiple regression models have a fairly high degree of approximation. The correlations between operating cash flows and outflows, between total cash inflow and outflow of the majority of power supply companies are high. The low level of synchronization between cash inflows and outflows of the companies under study is associated with the specifics of their financial and investment activities and the cash flow management policy. It has been proven that energy enterprises’ financial stability significantly depends on the synchronization and uniformity of cash flows. The proposed methodological approach allows identifying enterprises by the criterion of riskiness from the standpoint of the synchronization and homogeneity of their cash flows.

Internal rates of return and shareholder value creation

We propose a genuinely internal approach to project valuation and decision based on the average Return On Investment (ROI), obtained as the ratio of total operating profit (NOPAT) to total invested capital or, equivalently, as the ratio of net cash flow to total invested capital. The approach presented enables decomposing the economic value created into the project scale (total capital invested) and the economic efficiency, obtained as the difference between average ROI and a suitably adjusted weighted average cost of capital (WACC). We show that a project’s average ROI is equal to the weighted mean of the average Return On Equity (ROE) (total net income divided by total equity capital) and the average Return On Debt (ROD) (total interest expenses to total debt outstanding) and show that the average ROE itself correctly measures shareholder value creation when compared with a suitably adjusted cost of equity. We show that the internal average-based approach presented is also valid under the more general assumption of time-varying cost of capital.

Evaluation of the investments efficiency in the development of the key component of the supply chain

Supply chains are unique logistics systems. Typically, such systems include a number of components. The key component is considered to be the producer enterprise, around which supply chains are organized. The efficiency and effectiveness of the supply chain largely depends on the level of development of the key component. In turn, the latter depends on effective investment. It is established that the practice of enterprises-producers, which are key components of supply chains, requires a qualitative economic justification of investment measures, which must be forecasted for the long term before their implementation. The article substantiates the need to assess the effectiveness of investment in the development of a key component of the supply chain based on a targeted approach. It is indicated that to assess the effectiveness of investment in the development of industrial enterprises should use absolute and relative cash flows, the values of which are used in the calculations of absolute and comparative effects, respectively. With this in mind, a targeted approach should be applied to improve the quality of assessing the effectiveness of investment in the development of manufacturing enterprises. The essence of the criterion indicator of net cash flow is thoroughly described. It is stated that the economic assessment of the comparative economic effect should be based on the definition of incremental indicators that reflect changes in the activities of the enterprise due to the investment of additional investments in the assets of its logistics system. The tree of maximizing the efficiency of investments in the main assets of the production logistics system of the enterprise is formalized. An approach to evaluating the effectiveness of investing funds in the production and logistics system of the enterprise is proposed.

Accounting Information, Corporate Governance and Debt Covenants: Egyptian Evidence

Purpose – The purpose of this paper is to develop a new model for the effect of accounting information and corporate governance mechanisms on public and private debt covenants of firms listed on the Egyptian stock exchange. Design/methodology/approach – The paper uses the multiple regression model. This model includes three main variables of accounting information: change in net cash flows from operating activities, change in earnings before extraordinary items, and accounting disclosure levels. In addition, the model incorporates ten corporate governance mechanisms. The sample used in the current study consists of 66 observations of Egyptian firms that issued bonds or were granted bank loans in the period from 2003 through 2013. Findings – The paper concludes that the new model is useful in explaining the changes in the design of debt covenants. It finds that there is a significant negative relationship between accounting information and corporate governance mechanism on one side and price terms in the private debt contracts on the other side. There is a significant negative relationship between accounting information and corporate governance mechanism on one side and the non-price terms in the private debt contracts on the other side. There is a significant negative relationship between accounting information and corporate governance mechanism on one side and the price and non-price terms in private debt contracts on the other side. Practical implications – The findings have implications for lenders (banks and bondholders); through helping them in making credit decisions, as they rely on accounting information and corporate governance mechanisms when designing debt covenants that are imposed on public and private debt contracts. Originality/value – To the best of the authors’ knowledge, there are no Egyptian studies to date examining the effect of accounting information and corporate governance mechanisms on public and private debt covenants of firms listed on the Egyptian stock exchange. Consequently, this paper contributes to the limited literature by suggesting a new model for the effect of accounting information and corporate governance mechanisms on public and private debt covenants. Furthermore, this paper develops a new measure for non-price terms in debt contracts by creating a new index containing 109 terms of public and private debt covenants.

Economic Evaluation of CCUS Retrofitting of Coal-fired Power Plants Based on Net Cash Flow

Carbon Capture, Utilization and Storage (CCUS) is one of the key technologies for realizing large-scale low-carbon utilization of coal-fired power plants in service. How to evaluate its economics is crucial to the decision-making of traditional coal-fired power enterprises. This paper analyzes the changes in the physical, emission and economic parameters of in-service coal-fired power plants without and with the CCUS retrofit. A method for evaluating the economic feasibility of coal-fired power plants retrofitting based on net cash flow is proposed, which compares the impact of CCUS retrofit on the net present value of the remaining life cycle of the power plant. The impact of uncertain parameters such as carbon dioxide sales unit price, carbon capture device operating cost, free carbon quota, and carbon emission right price on the evaluation results are analyzed.

Comparing Growth Rates Used in Discounted Cash Flow Valuations

Estimating growth in net cash flows is one of the key components in applying the discounted cash flow (DCF) method in valuing any company, reporting unit, or other business unit. This paper explains the underlying assumptions of the DCF method and demonstrates how to compare the most commonly used basis for estimating net cash flows (sometimes referred to as free cash flows), expected organic growth, to historic estimates of growth of the subject company and estimates of earning growth commonly prepared by security analysts.

Earnings and cash flow persistence: Case of medium agriculture enterprises in Serbia

This paper examines the earnings and cash flow persistence of selected agriculture Serbian enterprises as a measure of their earnings quality. We study the persistence of income statements and cash flow statement items of medium-sized agriculture enterprises in Serbia. Agriculture is a relevant sector for the national economy and medium-sized enterprises are the main drivers of her economic growth. We use panel regression analysis with annual data over the period from 2010 to 2018. The results of our research indicate that earnings and cash flow-based indicators have different persistence. Analysing accruals and net cash flows of operating activities as determinants of operating profit of analysed enterprises, we conclude that operating profit that represents accruals are more persistent than operating profit backed by net operating cash flows.