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Cash flow patterns in listed South African industrial companies

Cash flow patterns in listed South African industrial companies A relatively simple way to analyse a company’s financial status is to examine the positive or negative signs of its cash flow patterns and to link certain characteristics to selected cash flow patterns. In this article, the frequencies of cash flow patterns in South African listed industrial companies are examined for a single financial period, as well as for three different cumulative periods, ending in 1993, 1996 and 2002 respectively. Mature companies, i.e. those with positive cash flow from operating activities, negative cash flow from investing activities and negative cash flow from financing activities, were identified as the most frequently occurring pattern during the selected periods. The study shows that the mature companies had the highest median amongst the more regular cash flow patterns, for the net profit percentage, for the cash flow from operating activities before the payment of dividends as a percentage of sales and for dividend payout. The study also reveals that companies in their growth phase had the highest medians for investment outflow, for sales growth and growth in total assets, for accounts payable and inventories. Start‐up companies had the highest medians for inflow from financing activities and for total debt to total assets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Meditari Accountancy Research Emerald Publishing

Cash flow patterns in listed South African industrial companies

B.W. Steyn Bruwer; W.D. Hamman
Meditari Accountancy Research , Volume 13 (1): 17 – Apr 1, 2005
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References (7)

Publisher
Emerald Publishing
Copyright
Copyright © 2005 Emerald Group Publishing Limited. All rights reserved.
ISSN
1022-2529
DOI
10.1108/10222529200500001
Publisher site
See Article on Publisher Site

Abstract

A relatively simple way to analyse a company’s financial status is to examine the positive or negative signs of its cash flow patterns and to link certain characteristics to selected cash flow patterns. In this article, the frequencies of cash flow patterns in South African listed industrial companies are examined for a single financial period, as well as for three different cumulative periods, ending in 1993, 1996 and 2002 respectively. Mature companies, i.e. those with positive cash flow from operating activities, negative cash flow from investing activities and negative cash flow from financing activities, were identified as the most frequently occurring pattern during the selected periods. The study shows that the mature companies had the highest median amongst the more regular cash flow patterns, for the net profit percentage, for the cash flow from operating activities before the payment of dividends as a percentage of sales and for dividend payout. The study also reveals that companies in their growth phase had the highest medians for investment outflow, for sales growth and growth in total assets, for accounts payable and inventories. Start‐up companies had the highest medians for inflow from financing activities and for total debt to total assets.

Journal

Meditari Accountancy Research – Emerald Publishing

Published: Apr 1, 2005

Keywords: Cash flow patterns; Cash generation; Growth phase; Life‐cycle; Maturity; Start‐up phase

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