Showing papers on "Cash flow forecasting published in 1980"

A Cash Conversion Cycle Approach to Liquidity Analysis

Abstract: Although working capital management receives less attention in the literature than longer-term investment and financing decisions, it occupies the major portion of a financial manager's time and attention [9, p. 173]. In part, this simply reflects the repetitive nature of investment commitments with relatively short life expectancy and rapid transformation from one investment form to another [6, pp. 1-2]. The time devoted to working capital management, however, also reflects the crucial liquidity or repayment capability implications of a firm's short-term investment and financing policies. Inattention to the liquidity management process may cause severe difficulties and losses due to adverse short-run developments even for the firm with favorable long-run prospects. Incorrect evaluation of the liquidity implications of a firm's working capital needs may, in turn, subject creditors and investors to an unanticipated risk of default. Financial managers and their external financial analyst counterparts recognize, at least intuitively, that all working capital investments do not enjoy the same life expectancy, nor are they transformed into usable liquidity flows at the same speed. It is not clear, however, that they recognize explicitly the crucial role f these differences in evaluating a firm's liquidity position. A cash conversion cycle approach to working capital management illustrates the potential danger of an intuitive approach to liquidity analysis.

Cash Flows, Ratio Analysis and the W.T. Grant Company Bankruptcy

Abstract: (1980). Cash Flows, Ratio Analysis and the W.T. Grant Company Bankruptcy. Financial Analysts Journal: Vol. 36, No. 4, pp. 51-54.

The objectives of financial statements: An empirical study of the use of cash flow and earnings by security analysts

Abstract: The Financial Accounting Standards Board (FASB) has tentatively accepted that cash flows to the enterprise are the major focus of financial statements. This article highlights the importance with which security analysts view earnings information and cash flow information in compiling their professional reports.

Cash Transfer Scheduling for Efficient Cash Concentration

Abstract: The essence of the cash allocation problem is moving money from a company's depository banks into a central cash pool in the company's concentration bank and moving money from the concentration bank to fund disbursing accounts. Moving money from depository banks to the concentration bank is called cash concentration. Moving money into disbursing accounts is called disbursement funding. Cash transfer scheduling concerns the timing and amount of cash transfers. Solving a cash transfer scheduling problem answers the questions of when transfers should be initiated and how much should be

Inter-Temporal Correlation of Cash Flows and the Risk of Multi-Period Investment Projects

Abstract: In capital budgeting when the net present value method (NPV) is used and future cash flows are uncertain, the measurement of the standard deviation of the project's net present value (0 ) is unusually difficult. Typically the investment life of the project is more than one year, and the cash flows of each period are correlated with each other. The difficulty in determining the exact inter-temporal correlation (p ) of cash flows creates special problems in estimating the overall variance of the investment project. For example, see [5, pp. 125-131]. This paper attempts to isolate the possible impact of the inter-temporal correlation of cash flows upon the total risk of the project under the assumption that the standard deviations of cash flows for each time period of the project are known. It also provides upper and lower bounds of 0 for a multi-period investment project where the degree of the inter-temporal correlation is not exactly known. Most texts on capital budgeting give the equations for 0 , assuming p = 0 and p = 1, and then with an example illustrate the range of U , Ut)(i t , L.TJG magnitude o can take on when P . 0 varies between 0 and 1. See, for example, [1, 4, 5, 6], However, it is possible that p may be negative, as well as positive. Therefore, this paper will examine the values cr can assume, allowing p . to vary between +1 and -1. t, t+? Section II presents the general case for o where p belongs to any value from the range [-1,1]. Section III presents the upper and lower bounds of o for the general case. Section IV summarizes by the use of a simple example. The Appendix provides a formal proof of the upper and lower bounds.

An examination of cash flow and conventional net income measures for evaluating the economic viability of farms of varying size

Abstract: This study examines the question of income adequacy as it relates to the broader issue of an economically viable farm size in the Columbia Basin of Washington State. The issue is especially relevant because of possible limitations on farm size resulting from enforcement of the 1902 Reclamation Act. Income estimates derived under two alternative accounting frameworks - the standard economic accounting method and the after-tax cash flow accounting method - were examined. Findings were that the after tax cash flow accounting framework was more appropriate for examining the income adequacy aspect of the viability issue as it incorporated the effect of federal income taxes and farmer's equity, both of which are important determinates of income levels. Using the after-tax cash flow accounting framework, the after-tax cash flow for a representative 320 acre farm was found to range between $16,858 and $42,670 depending upon the profitability of the selected crop rotation.