• Title/Summary/Keyword: cash management

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A Study on the Cash Policies of Retail Firms (유통 상장기업의 현금정책에 관한 연구)

  • Son, Sam-Ho
    • Journal of Distribution Science
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    • v.13 no.3
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    • pp.69-77
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    • 2015
  • Purpose - The purpose of this study is to examine whether the cash policies of retail firms listed on Korean stock markets are consistent with the evidence provided in the study of Almeida et al. (2004). Liquidity management is an important issue for financially constrained firms relative to financially unconstrained firms. Because there are few sources of external funding, the optimal liquidity policies of financially constrained firms should reflect their own earnings or cash inflows to create opportunities for current and future real investments. According to this simple idea, we estimate the sensitivity of cash to cash flows and simply check whether the estimated sensitivity to cash flows of the cash retained by constrained retail firms is greater than that of the cash retained by unconstrained retail firms. Through this work, we aim to explain why the cash policies of the retail firms listed on the Korean stock markets differ from those of listed manufacturing enterprises. Research design, data, and methodology - To explain a firm's cash holdings, we use only three explanatory variables: earnings before interest and taxes (EBIT), Tobin's q, and size. All the variables are defined as the value of the numerator divided by aggregate assets. Thanks to this definition, it is possible to treat all the sample firms as a single large firm. The sample financial data for this study are collected from the retail enterprises listed on the KOSPI and KOSDAQ markets from 1991 to 2013. We can obtain these data from WISEfn, the financial information company. This study's methodology has its origin in Keynes's simple idea of precautionary liquidity demand: When a firm faces financial constraints, cash savings from earnings or cash inflows become important from the corporate finance perspective. Following this simple idea, Almeida et al. (2004) developed their theoretical model and found empirical evidence that the sensitivity of cash to cash flows varies systematically according to different types of financing frictions. To find more empirical evidence for this idea, we examined the cash flow sensitivity of the cash held by Korean retail firms. Results - Through several robustness tests, we empirically showed that financially constrained Korean retail firms display significant positive propensity to save cash from earnings before interest and taxes, while the estimated cash flow sensitivity of the cash held by unconstrained retail firms is not significant. Despite the relatively low earnings of retail firms, their sensitivity is three times greater than that of manufacturing enterprises. This implies that Korean retail firms have greater intentions of facilitating future investments rather than current investments. Conclusions - The characteristics of the cash policies of Korean retail firms differ from those of manufacturing firms. This contrast may be attributable to industry-oriented policy planning, regulations, and institutional differences. However, the industrial policymakers should observe signals of the long-term growth options of retail firms based on their high propensity to save from their cash inflows.

Is the amount of the medical care utilization affected by the cash benefits for patients in the geriatric hospital? (요양병원 간병비 지급이 건강보험 진료이용량에 미치는 영향)

  • Kang, Im-Ok;Han, Eun-Jeong;Lee, Jung-Suk
    • Health Policy and Management
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    • v.19 no.2
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    • pp.36-50
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    • 2009
  • Korean Government had performed three pilot programs to introduce the long term care insurance system. Persons aged 65 or older who are dependent on others for daily living could use long term care services in the pilot program. The long-term care insurance covered nursing home services, home care services and cash benefits. The cash benefits are included that for elderly at home and for patients in geriatric hospital. This study investigated whether there had been any change in the medical care utilization according to cash benefits for geriatric hospitalization. This study used National Health Insurance claims and Long term Care Insurance claims 2003 through 2006. Data were composed of subjects who undertook both insurance coverage. The subjects was divided into two groups. Case group included participants with the cash benefits of geriatric hospitalization. Control group included persons without the cash benefits selected by random sampling according to the distribution of case group. This study showed that the amount of medical care utilization of the case group is more significantly increased than the control group after adjusted their health condition and functional condition. This result will be helpful for making decisions on whether the cash benefit of geriatric hospitalization can be introduced into long term care insurance system.

The study of cash management system model using the RFID (RFID를 이용한 자산관리시스템 모델 연구)

  • Lee, Sun-Hyun;Kim, Min-Hong
    • Journal of the Korea Computer Industry Society
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    • v.5 no.8
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    • pp.801-810
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    • 2004
  • It is only 2 ~ 3 years in the interior to be introduced as a Ubiquitous era after going through mainframe, PC and internet era on account of the advent of computer. This thesis intends to present a model device of an epoch-making cash management system using the RFID(Radio Frequency Identification) Tag and EPC (Electronic Product Code) Platform which are core technologies of the Ubiquitous Computing on the assumption that cable and wireless internet is constructed in university. Also this sets up a purpose to minimize the administrative procedure as well as the waste of time, people and cost which are problems of the cash management system operating now. Therefore as a research project hereafter, it will be able to present an imporvement device about the problems which cannot solve these days through the model of the proposing cash management system when the standardization, normalization and commercialization of advanced IT department are accomplished.

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An Investigation of the Comparative Rate of Return

  • Park, Young-Hyun
    • Journal of the Korean Operations Research and Management Science Society
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    • v.11 no.1
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    • pp.12-23
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    • 1986
  • The minimum attractive rate of return (MARR) has been used for many years as a decision criterion in engineering economic analysis. Typically, inflation has been either ignored in such studies or considered by adjusting each of the individual cash flows associated with a project for inflation, frequently a lengthy process. This research investigates a new decision criterion for economic analysis, the comparative rate of return (CRR). The CRR is defined to be the minimum rate of return earned on uninflated cash flows of proposed expenditures is simplified, since the analysis can be performed on the uninflated cash flows. The research presents a derivation of the CRR and investigates its relationships to the MARR, inflation rate project cash flows and project life.

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Cash flow Forecasting in Construction Industry Using Soft Computing Approach

  • Kumar, V.S.S.;Venugopal, M.;Vikram, B.
    • International conference on construction engineering and project management
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    • 2013.01a
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    • pp.502-506
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    • 2013
  • The cash flow forecasting is normally done by contractors in construction industry at early stages of the project for contractual decisions. The decision making in such situations involve uncertainty about future cash flows and assessment of working capital requirements gains more importance in projects constrained by cash. The traditional approach to assess the working capital requirements is deterministic in and neglects the uncertainty. This paper presents an alternate approach to assessment of working capital requirements for contractor based on fuzzy set theory by considering the uncertainty and ambiguity involved at payment periods. Statistical methods are used to deal with the uncertainty for working capital curves. Membership functions of the fuzzy sets are developed based on these statistical measures. Advantage of fuzzy peak working capital requirements is demonstrated using peak working capital requirements curves. Fuzzy peak working capital requirements curves are compared with deterministic curves and the results are analyzed. Fuzzy weighted average methodology is proposed for the assessment of peak working capital requirements.

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Corporate Cash Flow Exposures to Foreign Exchange Rate and the Determinants : Korean Listed Non-financial Firms (현금흐름의 단기 환노출과 결정 요인에 관한 연구)

  • Kang, Won
    • The Korean Journal of Financial Management
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    • v.26 no.3
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    • pp.31-64
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    • 2009
  • This article investigates the short-term cash flow exposures to Korea's major trading partners' currencies based on the kospi and kosdaq firm data from 2000 to 2008. The cash flow approach allows us to analyze the influence on operational performances of individual firm's hedging strategies. Taken all three foreign exchange rates together, more than 30% of the sample firms exhibit significant exposure. Given that the short-term cash flow is rather easy to hedge, the result proves a poor exchange rate risk management practices of Korean firms. Kosdaq firms are more exposed than Kospi firms. On the contrary to the previous researches using stock prices, the operational cash flows show a positive relationship with the value of foreign currencies. The exchange rate-firm sample further shows that the size and leverage affect the level of exposure.

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The Relationship between Supply Chain Management Performance Metrics and Corporate Value for Firms in Korea by Using Multiple Linear Regression Analysis : Focused on Inventory and Cash-To-Cash Cycle Time (다중회귀분석을 활용한 국내 기업의 공급체인관리 성과지표와 기업 시장가치와의 상관관계 분석 : 재고와 현금화주기를 중심으로)

  • Jahng, Geum-Joo;Yang, Jae-Hwan
    • IE interfaces
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    • v.25 no.2
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    • pp.241-254
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    • 2012
  • This paper studies the relationship between SCM(Supply Chain Management) metrics and corporate value (Tobin's Q) for manufacturing and wholesale/retail firms in Korea. Specifically, the multiple regression analysis is used to investigate the relationships 1) between inventory level, inventory turns, and days of inventory and Tobin's Q and 2) between cash-to-cash (C2C) cycle time including its components such as days of inventory, days sales outstanding, and days payable outstanding and Tobin's Q. The results indicate that there exist statistically significant negative relationships between inventory levels and days of inventory (DOI) and Tobin's Q. Also, we found that there exist commonly known negative correlations between days of raw materials inventory and days of work in process (WIP) inventory and Tobin's Q. For the C2C cycle time, we found that there -exists a statistically significant negative relationship between the C2C cycle time and Tobin's Q. Also, we found that there exist commonly known correlations between the two components of C2C cycle time and Tobin's Q such as the negative for DOI and days sales outstanding. This study clearly shows the negative relationship in general between inventory levels and corporate value and between C2C time and corporate value, and this kind of result has not been found by previous studies in Korea.

Analysis of Household Income and Expenditure of Households with a Negative Cash Flow Across Income Groups in 2000, 2005, and 2010 (소득계층별 적자가계의 소비 지출 분석: 2000, 2005, 2010년의 가계를 대상으로)

  • Lee, Jonghee;Yang, Sejeong
    • Journal of Families and Better Life
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    • v.32 no.5
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    • pp.125-143
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    • 2014
  • The purpose of this study was to gain a better understanding of households with a negative cash flow. The Household Budget Survey conducted in 2000, 2005, and 2010 by the Bureau of Statistics in South Korea were used for this study. The households used in this study were divided into four groups according to their income levels; they were categorized the lowest, low, middle, and high income groups. This study made several findings regarding households with a negative/positive cash flow. Firstly, the demographic and economic characteristics were different between those who have a negative cash flow and those with a positive cash flow. A female household head, a household head age 65 and older, a household head with a lower educational attainment, an unemployed household head, and the presence of a child/children in schools were related with the household deficit. Secondly, the households with a positive cash flow had a higher income level compared to the households with a negative cash flow, while the households with a negative cash flow had a much higher consumption level compared to the households with a positive cash flow. Thirdly, the household deficit to total income ratio of the lowest income group was higher when compared to any other income group. Lastly, the multivariate statistics showed that households including a child/children in schools are more likely to be a household with a negative cash flow. Especially, the expenditures on education and transportation were related with the likelihood of a household deficit.

The Tests of Free Cash Flows Hypothesis about Stock Repurchase (자사주매입에 관한 잉여현금흐름가설 검정)

  • Shin, Min-Shik;Lee, Jung-Suk
    • The Korean Journal of Financial Management
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    • v.24 no.1
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    • pp.59-83
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    • 2007
  • In this paper, we test empirically free cash flows hypothesis about stock repurchase. The main results of this study can be summarized as follows. First, repurchasing firms do not experience a growth in profitability relative to their peer firms. Second, repurchasing firms experience a contraction in their investment opportunity, and so capital expenditures and cash reserves decline after the repurchase. Third, repurchasing firms experience a decline in systematic risk and investments and in their cost of capital. Fourth, the reduction in profitability and cost of capital are sources of the positive market reaction to the repurchase announcement. And the market reaction to stock repurchase announcements is stronger among those firms that are more likely to overinvest. Conclusively, these results support free cash flows hypothesis. When firms experience a decline in profitability, capital expenditures and cash reserves, systematic risk and cost of capital, they decide to repurchase stocks to reduce free cash flows.

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Family Ownership and Dividend Policy: Evidence from India

  • RAJVERMA, Abhinav;MISRA, Arun Kumar;KUMAR, Gaurav
    • The Journal of Asian Finance, Economics and Business
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    • v.9 no.9
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    • pp.61-73
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    • 2022
  • The article examines the ownership structure and dividend payout behavior of India-listed firms using a panel regression approach. It focuses on family ownership and examines why dividend payouts of family firms differ from non-family firms. The study finds that family firms dominate and have concentrated ownership using data from the NSE-listed regular dividend-paying firms. Although family ownership concentration is high among Indian firms, these firms are not concerned about distributing cash as dividends. Instead, these firms focus on retaining and passing on control from one generation to the next. The evidence shows that family firms pay low dividends and have higher leverage than non-family counterparts. The results support the entrenchment of minority shareholders and the proposition that a high payout signals a reduction in the information asymmetry and level of risk. The study further illustrates that cash dividends tend to reduce the level of risk perceived; however, (cash dividend) leads to the deterioration firm's liquidity and aid in the shrinking of cash among emerging market firms. The originality of the paper lies in factoring ownership concentration while explaining the dividend behaviour from an emerging markets perspective, characterized by high private benefits and weak protection for external minority shareholders.