Value Of Cash Flows Research Articles

How microeconomic factors influence Vietnam’s listed manufacturing firm value

It is meaningful to identify and quantify the impact of business microeconomic factors on firm value, not only for enterprises, but also for the industry, which contributes to the economic growth of the whole country. This paper aims to find evidence of how microeconomic factors relate to the value of manufacturing firms, helping businesses behave and adjust towards the goal of value maximization. This study applies three commonly used estimators with panel data, namely OLS, FEM and REM, using data obtained from FiinPro (a data providing company) and Vietstock on 691 companies listed on Vietnam’s two stock exchanges from 2008 to 2015; This was a sensitive period of world financial crisis, and Vietnamese manufacturing firms had a really hard time to overcome the difficulty in a global economy downturn. This paper found that (1) firm size, growth opportunities and financial leverage negatively affect firm value; (2) there is no evidence that operating cash flow, cash liquidity and intellectual capital affect firm value; (3) the estimation results confirm the non-linear relationship (order 3) between the directors’ share ownership ratio and corporate value; (4) state ownership and foreign ownership ratios have a negative effect on Vietnamese listed manufacturing firms during the period, but (5) there is no optimal number of BOD members. The findings help to measure the extent of the positive and negative impact of various factors, making it easier to find solutions to improve business value by promoting positive factors and preventing negative factors.

Relevance of Value Owned Profit and Cash Flows Based on the Life Cycle in the Growth Stage of Food and Beverages Companies Listed on the Indonesia Stock Exchange

This study aims to determine the relevance of the value of earnings and cash flow as a measure of accounting performance against market value when the company is in the growth life cycle. The sample of this company is a food and beverage company listed on the Indonesia Stock Exchange in 2006-2010. The sample was selected using the purposive judgment sampling method and 16 companies were sampled. The results showed that (1) earnings have value relevance in measuring the market value of the company at the stagegrowth, (2) profit is significant to the market value of companies that are in the company's life cycle at the growth stage, (3) cash flows are not significant to the market value of companies that are in the company's life cycle at the growth stage, (4) profit is an option for investors in assessing whether they will invest in the company. With a relatively short time, investors are required to move quickly and precisely in assessing the company, therefore profit is the right component in completing work.

Research and Application of Company Valuation Methods

The idea of company valuation originated from Irving Fisher's financial budget theory. The MM theory of American scholars F.Modigliani and Merton H.Miller marks the emergence of valuation theory in the modern sense. This paper mainly studies the theory and application of two company valuation methods—relative valuation method and absolute valuation method. It can be concluded from the research that the essence of valuation methods is the discounted valuation of future cash flows. In the case of stable performance, the price-earnings ratio P/E relative valuation method is the most intuitive. At various stages of development, the same company uses various valuation methodologies. The valuation approach should be modified in accordance with the company's current position. In addition, there is some subjectivity involved in valuing something because there is no universally accepted method. The significance of this research lies in valuation methods have their own advantages and limitations, and they have different emphases. Multiple valuation methods can be used for a comprehensive comparison.

The Application Of DCF Model in the Enterprise Value AssessmentA Case Study of Tesla, Inc

With the rapid development of today's society and economy, more and more public investors are not satisfied with bank financial products, which have lower value-added, but turn their attention to the capital market. The quantitative technique of DCF model combined with qualitative analysis to assess the intrinsic value of enterprises provides an effective reference for public investors. Tesla, a company that produces new energy vehicles, has shown rapid growth in recent years and is suitable for valuation using DCF models. This paper predicts the growth rate of Tesla's operating income in the next five years based on its historical financial data, and uses the percentage of sales method combined with qualitative analysis to calculate the present value of the enterprise's free cash flow in the next five years, and also calculates the present value of the enterprise's future perpetuity based on the assumption of the enterprise's going concern, and the two are added together to obtain the intrinsic value of Tesla Inc. as $5160.95 billion. The total market value of Tesla Inc. on November 22, 2022 (valuation point in time) is $5365.34 billion (data source: https://www.msn.cn). The intrinsic value of the enterprise is lower than the market price, and investors are advised not to buy.

Does capital structure moderate the impact of the investment opportunity set and institutional ownership on firm value?

The existence of a research gap compared to previous studies related to the effect of the relationship between institutional ownership and investment opportunity set on firm value in Indonesia is interesting to review. This study aims to reveal the relationship of these influences by adding capital structure as a moderating variable that serves to strengthen it against firm value. The research variables are the ratio of market value to book value of assets, institutional ownership, debt-to-equity ratio and free cash flow. The research timeframe is 2019–2021, using data taken from companies in the manufacturing sector in the Indonesian Capital Market (IDX). Data sampling was carried out using the purposive sampling method. Data analysis to determine the relationship of these effects and hypothesis testing were performed using multiple regression. The empirical research findings indicate that the investment opportunity set has a positive effect on increasing firm value, while capital structure has a negative effect on decreasing it. Institutional ownership and free cash flow do not determine firm value, so free cash flow does not serve as a control variable. The main finding of this study is revealing that capital structure plays a role in strengthening the effect of the relationship between investment opportunity sets on firm value. Acknowledgments This research is an independent study that is not funded by donor agencies.

Financial Analysis and Valuation on Carrefour SA

As one of the largest retailers in the world, Carrefour SA performed outstandingly in FY 2021. In the face of the post-pandemic recovery of economy, in order to provide information and suggestions on investment, the paper analyses the accounting and performance of Carrefour in FY 2021. The accounting of essential factors in retail industry such as revenue, inventory, depreciation and goodwill was reliable and precise comparing to its most competitors. Performance was surprising and showed an increasing trend. Based on previous data and recent news, the paper forecasts the revenue, costs, interest and tax charges and the balance sheet. The continuous demand of the market and the expansion in Brazil market may have positive effects while the high inflation and developing energy crisis in Europe are the opposite. Using discounted cash flow (DCF) valuation method, the earnings per share (EPS) of Carrefour SA in FY 2022 and FY 2023 are calculated. Both Yahoo and Bloomberg give similar predictions that the EPS are expected to have a positive prospect.

The Effect of Operating Cash Flow And Book Value On Financial Distress

Competition in every company at this time is required to manage the business well and do new things in order to compete to maintain its business continuity. Companies that lose competitiveness will lose money and can experience financial distress. The research aims to analyze the impact of operating cash flow and book value on financial distress in state-owned companies listed on the IDX for the period 2009-2019. The research sample is a state-owned company that publishes financial statements in the 2009-2019 period in a row. The research uses a quantitative approach with a causal method. Multiple regression with SPSS was used in data analysis. The results of the study concluded that operating cash flow partially had a significant impact on financial distress. Book Value partially has insignificant impact on Financial Distress.

Managerial Ownership, Leverage, Dividend Policy, Free Cash Flow, Firm Value: Evidence in Indonesia Stock Exchange

Limited liability company agency issues in Indonesia make for an exciting study topic from both the corporate law and corporate finance perspectives, giving rise to an agency issue, or conflict of interest. Determining the impact of managerial ownership, leverage, and dividend policy on free cash flow and firm value in the Manufacturing Industry listed on the Indonesia Stock Exchange from 2014 to 2020 is the goal of the study. 33 sample companies and 198 data samples total are used in this purposive sampling study. The data is balanced panel data that was analyzed using a stepwise regression approach. The results showed that managerial ownership had a significant negative effect on firm value, leverage did not affect firm value, dividend policy had a significant positive effect on firm value, and free cash flow had a significant positive effect on firm value. managerial ownership does not affect free cash flow, leverage has a significant positive effect on free cash flow, and dividend policy has a significant negative effect on free cash flow. This study implies that managers tend to be opportunistic so institutional ownership interference in the manufacturing industry in Indonesia is still high. High dividend payments will give a positive signal that will have an impact on increasing stock prices.

Methodology for assessing the comparative efficiency of cargo transportation by water transport

The article is aimed at the implementation of the tasks set by the strategy for the development of inland water transport, and increasing its role through the optimal distribution of cargo transportation between modes of transport on the basis of strategic management and regulation by state bodies. To this end, a methodology for assessing comparative efficiency for strategic planning and current regulation is proposed, taking into account the interests of three subjects: the transport system, the consumer of its services (cargo owners) and the national economy (society) as a whole. Two groups of indicators are given: cost and physical, reflecting the energy efficiency and environmental friendliness of transportation. Cost indicators are developed on the basis of the previously used costs, which differ in the content of the efficiency coefficient of capital costs or fixed assets. The novelty of this coefficient lies in determining the size of the rate of return, both for simple and extended reproduction, taking into account the depreciation rate and changes in the value of cash flows during the life cycle by discounting. Therefore, the value of the reduced costs is treated as the cost of transportation. Based on the proposed cost and physical indicators, calculations are given for three types of transport, showing the efficiency of the proposed approach, an analysis of the results is given, and preliminary conclusions are drawn about the adequacy of the approach.

A Model for Risk Adjustment (IFRS 17) for Surrender Risk in Life Insurance

We propose a model for risk adjustment, in the context of IFRS 17, for surrender risk. Surrender rates are assumed to follow a stochastic process, underpinned by data. The distribution of the present value of future individual cash flows is calculated. Using well-known techniques from the theory of convex ordering of stochastic variables, we present closed formula approximations of risk measures, such as quantiles, for the total portfolio. These formulas are easy to program and enable an insurance company to calculate its risk adjustment without time-consuming simulations.

Can carbon payments improve profitability of traditional conventional and organic cocoa agroforests? A case study in the Eastern Region of Ghana

This study investigates the carbon (C) sequestration of traditional cocoa agroforestry systems in the Eastern Region of Ghana and the theoretical impact of CO2 emission rights trading on their profitability. The study was conducted in four villages of Suhum Municipality, two each with either conventional or organic cocoa cultivation systems. Profitability was calculated using net present value of net cashflow (NPV), benefit cost ratio (BCR), and modified internal rate of return (MIRR). Carbon revenues were calculated using CO2 emission trading rights prices ranging from 7.5 € tCO2eq.−1 (average EU trading price) to 42 € tCO2eq.−1(estimated social cost of CO2 release). We tested the sensitivity of profitability indicators with three scenarios: 300% increase in interest rates, 20% yield reduction, and 10% increase in cost. NPV without CO2 payment for conventional agroforest was 20% higher than that of organic agroforest. Contrarily, BCR for the organic system was 30% larger than for the conventional counterpart. Profitability indicators for both systems were most sensitive to the 300% interest rate. The average C sequestered was 153 ± 13 t ha−1 whereby soil contributed the largest fraction with an average of 88 ± 11 t ha−1. Total C sequestered in the organic system was 30% higher than in the conventional system. In conclusion, CO2 payments can improve the attractiveness of organic cocoa cultivation for farmers, although the paid price must be oriented to the estimated social costs caused by CO2 release rather than the currently used trading price in the EU.

Multiple-prior valuation of cash flows subject to capital requirements

We study market-consistent valuation of liability cash flows motivated by current regulatory frameworks for the insurance industry. The value assigned to an insurance liability is the consequence of (1) considering a hypothetical transfer of an insurance company's liabilities, and financial assets intended to hedge these liabilities, to an empty corporate entity, and (2) considering the circumstances under which a capital provider would want to achieve and maintain ownership of this corporate entity given limited liability for the owner and that capital requirements have to be met at any time for continued ownership.We focus on the consequences of the capital provider assessing the value of continued ownership in terms of a least favorable expectation of future dividends, meaning that we consider expectations with respect to probability measures in a set of equivalent martingale measures. We show that natural conditions on the set of probability measures imply that the value of a liability cash flow is given in terms of a solution to a backward recursion. Through a life and a non-life insurance example we demonstrate how to make the valuation approach operational.

Equity Valuation of Ferrari under Multiple Valuations

This paper aims at determining the stock price of Ferrari, which is a leading company in the luxury performance car industry, to evaluate if it's overpriced or not and discuss the potential limitations of the valuation method. The valuation is based on multiple valuations. The target share price of Ferrari is calculated using the average P/E ratio after identifying Ferrari's comparable peer group. The paper calculates a share price of $91.98, which is significantly less than its current share price of $196.90, based on the P/E ratio valuation. The outcome suggests that Ferrari was expensive. Ferrari's dominant position within the industry as a whole and the inherent flaws in the valuation mechanism is the key factors influencing this. To have a better understanding of the company itself, more models, such as discounted cash flow valuation, are advised. P/E ratio valuation can be employed as an initial screening technique. This essay offers some insights into Ferrari and the entire high-performance automobile market, which can be helpful when calculating the share prices of top firms like Ferrari.

The Influence of the Pandemic on Decisions Occuring During the Last Few Years

The notion that present value of cash flows is often improperly estimated in financial models concerning capital improvements and abandonments is a fundamental problem in decision analysis in management and associated decisions and affects estimation of and valuation of intellectual property. Previous studies indicate the usefulness of estimation theory in financial in financial accounting. During the Covid Pandemic of the past few years decisions by governmental and health authorities in the United States and the World were often dictatated during the Pandemic by short-term political influences which included disinformation by some who wished to rake advantage of the misuse of the health Pandemic for political gain and/or financial power and short-term financial gain. Previously this was show to be true as the media with the aid of self-promotional activities by many who were attempting this kind of gain. Furthermore the Pandemic in the United States and other nations is receding in drfamatic ways and many restrictions of the Endemic era are nolonger in use. This was the result of Mask restrictions and increasing but not universal vaccine programs many states and nations.

A pricing formula for delayed claims: appreciating the past to value the future

We consider the valuation of contingent claims with delayed dynamics in a Samuelson complete market model. We find a pricing formula that can be decomposed into terms reflecting the current market values of the past and the future, showing how the valuation of prospective cashflows cannot abstract away from the contribution of the past. As a practical application, we provide an explicit expression for the market value of human capital in a setting with wage rigidity. The formula we derive has successfully been used to explicitly solve the infinite dimensional stochastic control problems addressed in Biffis et al. (SIAM J Control Optim 58(4):1906–1938, 2020), Djeiche et al. (Stoch Process Appl 145:48–85, 2022) and Biagini et al. (SIAM J Financial Math 13(3):1004–1039, 2022).

Managerial market timing under credit risk: How do timed buybacks and stock issuances influence the value of long-term shareholders?

Using discounted cash flow valuation together with a Merton-style credit risk model this paper quantifies the effects of credit risk on timed equity buybacks and issuances. Assumed managers act in best interest of their long-term shareholders and do have superior information, the potential value gain for long-term shareholders out of market timing with and without credit risk is evaluated. As demonstrated in a real-world example, credit risk is important. Ignoring credit risk results in value gains of buybacks motivated by smaller (larger) mispricing levels being underestimated (overestimated), while value gains of issuances driven by lower (larger) mispricings are overestimated (underestimated). These effects are stronger for firms with higher debt levels.

The differential pricing of cash flows and total accruals

PurposeRecent studies on the securities market's differential pricing of earnings components indicate that cash flows from operations are valued more highly than extreme total accruals. However, no previous study has examined whether cash flows from operations have a higher valuation than moderate total accruals. Therefore, this study examines the securities market's differential pricing of cash flows from operations and both moderate and extreme total accruals.Design/methodology/approachThe study's sample is divided into two sub-samples: a moderate total accruals sub-sample; and an extreme total accruals sub-sample. To evaluate whether cash flows have a higher valuation when compared to total accruals, for the entire sample and for each of the two sub-samples, the study examines the statistical significance of the difference between slope coefficients of cash flows and total accruals for regression of returns on both unexpected cash flows from operations and unexpected total accruals.FindingsConsistent with prior research, results from the entire sample show a differential higher valuation of cash flows when compared to total accruals. Another finding, consistent with recent studies, is that cash flows from operations have a higher valuation when compared to extreme total accruals. However, there is no higher differential valuation of cash flows over moderate total accruals. These findings support the decomposition of earnings into the components of cash flows from operations and total accruals only when total accruals are extreme (rather than moderate).Practical implicationsA possible explanation for these results is that since accruals predict cash flows, total accruals – when moderate (i.e. not extreme) – are priced similarly to cash flows. These results reveal that when total accruals are moderate, earnings are a better proxy for the underlying cash flows (over the entire future horizon, not just the current period) than is cash flows. However, since total accruals are unlikely to persist in a permanent way over the years, these results indicate that the decomposition of earnings into the components of cash flows from operations and total accruals is consistent with the information set used to value equity securities. Therefore, separate disclosure of cash flows is value relevant. In addition, users of financial statements certainly need the cash flows information as an ex-post validation of the prior earnings.Originality/valueThis study's contribution stems from its determination of the preferred level of disaggregation of earnings components (i.e. operating cash flows and total accruals). This is expected to help investors in their attempt to enhance the outcome of their informed investment and credit decisions.

Effect of Company Profit, Operational Cash Flow and Book Value of Equity on Stock Price

Effect of Company Profit, Operational Cash Flow and Book Value of Equity on Stock Price

Effect of Company Profit, Operational Cash Flow and Book Value of Equity on Stock Price

In 2021, sector mining experienced a growth of 7.78% yearly (YoY). The reason occurs because of exists increase in the price of commodities by a hundred percent. It is what becomes something phenomenon based on the study of this. Study this conducted with destination for knowing influence from Company Profit, Operating Cash Flow, and Book Value Equity on the price of a share company. Company Profit, Operating Cash Flow, and Book Value Equity role as variable independent, while the share price plays a role as a variable dependent. As for the population in the study, this is company mining companies listed on the Indonesia Stock Exchange (IDX), totaling 47 companies. At the same time, the sample used in the study consists of 9 companies whose price share tends to be stable. Study this use method analysis multiple linear regression, with the testing hypothesis in the form of t-test (partial), F-test (simultaneous), and coefficients determination. Whereas method testing data using normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. Results of the study show that company profit and book value Equity are positively and significantly influenced by Share Prices. Whereas Operating Cash Flow no had influence positive and significant on Share Prices.

Application of mixed logistic regression models in the evaluation of internal and external determinants of the effectiveness of commodity funds

The article presents the use of mixed logistic regression models in the study of the effectiveness of investment funds. The aim of the research is to identify and evaluate the factors influencing the effectiveness of commodity funds in Poland using mixed logistic regression models. R 3.6.0 statistical package was used for calculations. The logarithmic rate of return was adopted as a measure of the effectiveness of the funds, and it also served as the dependent variable. Eleven internal and external factors influencing the effectiveness of funds were identified as explanatory variables. The time horizon of the study covered a 5-year period from 2015 to 2019. The subject of the study were commodity funds operating in Poland. The created mixed logistic regression model made it possible to conclude that three factors have a statistically significant impact on the chance of recognizing a commodity fund as efficient: the value of cash flows (CF), the value of the CRB Commodity Index (CRB) and the gold futures price (GC).