The first objective of the study is to determine the differences that exist between the two classes of ratios used to measure liquidity of a business entity. A comparison will then be made between these liquidity ratios. The second objective is to illustrate that cash flow ratios are a better indication of liquidity of an entity than the traditional ratios. The traditional and cash flow ratios will illustrate the position of liquidity with information utilised from the various bankrupt companies’ financial statements, including the statement of financial position and statement of cash flows. Four years’ financial statement data will be used to illustrate the deteriorating liquidity positions of the companies.

Thesis (MBA)--Universiteit van Stellenbosch, 1997. / ENGLISH ABSTRACT: In this study an investigation has been made into the cash flow of delisted companies to determine whether any patterns appear.The hypothesis has been make that if companies, after their annual company taxation and finance charges have been paid, have a negative cash flow over two consecutive years, they will most probably be delisted the third year. In order to address the problem in the short term a rights issue can be done, but the problem is not necessarily solved. In lay language it would imply that the operating capital cycle is too high, or that the earnings before interest and taxation are too low, or that the growth rate is too high, or a combination of the three factors. Financing must therefor be arranged to meet the legal liabilities, such as interest and taxation, and also to finance any expansion, investment or growth. The short-term answer is indeed a rights issue to existing shareholders. If this option is exercised the cash-flow pattern could be disturbed since the extra capital can, in some cases. save the company despite the negative cash flow. In the long term it is not preferable since the company may run into financial difficulties due to excessive growth as a result of poor management, although the rights issue can keep the company alive in the short term. Nonna1 and preference shares are issued regularly to increase capital and the resulting costs are less than those of a long or short-term loan. Shareholders will lose dividends under these circumstances provided that the company grows and the share price rises in the process. This study has shown that even these companies, where the poor cash flow pattern is disturbed, could not be saved from financial disaster. / AFRIKAANSE OPSOMMING: In hierdie studie is ondersoek ingestel oa die kontantvloei van gedenoteerde maatskappye om te bepaal of daar enige patrone voorkom. Die hipotese is gemaak dat as maatskappye, nadat hulle jaarlikse maatskappybelasting en finansieringskostes betaal is, 'n negatiewe kontantvloei oor twee agtereenvolgende jare bet, hulle heel moontlik die derde jaar gedenoteer sal word. Om op die kort termyn die probleem aan te spreek sal 'n regte-uitgifte gedoeu kan word, maar die probleem word nie noodwendig opgelos nie. In leketaal sou dit impliseer dat die bedryfSkapitaa1siklus te groot is, of dat die verdienste voar rente en belasting te laag is, of dat die groeikoers te boog is, of 'n komhinasie van die drie faktore. Finansiering moet dus geree} word am die wetlike aanspreeklikhede, soos rente en belasting, Da te kom en ook am enige uitbreiding, investering of groei te finansier. Die korttermynantwoord Ie juis in 'n regte-uitgifte aan bestaande aandeelhouers. Indien hierdie opsie uitgeoefen word, sal die kontantvioeipatroon versteur kao word aangesien die ekstra kapitaal die maatskappy, ongeag die negatiewe kontantvloe~ in sommige gevalle kan red. Oor die lang termyn is dit rue wenslik rue aangesien die maatskappy homself kan doodgroei of bloot kan ondergaan as gevolg van swak bestuur, alhoewel die regte-uitgifte die maatskappy oor die kort termyn lewendig hou. Gewone en voorkeuraandele word geree1d uitgereik om kapitaal te verhoog en die voortspruitende verpligtinge is minder as die van 'n lang- of korttermynlening. Aandeelhouers sal onder omstandighede dividende inboet mits die maatskappy groei en die aandeelprys in die proses styg. Die ondersoek het getoon dat selfs die roaatskappye. waar die swak kontantvloeipatroon verst-eur word, nie van ondergang gered kon word rue.

Thesis (MBA)--Stellenbosch University, 2001 / ENGLISH ABSTRACT: This focus of this study is to analyse trends between three different performance variables for all listed industrials on the Johannesburg Stock Exchange. The three variables are earnings per share, headline earnings per share and operating cash flow per share. Sample A represents data from 1974 to 1999, and Sample B from 1990 to 1999. There are many companies that still do not report headline earnings per share in their financial reports as at the end of their financial year for 1999. A list of these companies is attached as Appendix A. A total of 21 different combinations of the variables were tested for correlations. From this investigation three significant relationships were noted. Firstly, there is a high correlation between earnings per share and operating cash flow per share. The pooled result from 1974 to 1999 is 0,636, that confirms a positive relationship between the two variables. Secondly, the result of the same two variables from the Sample B dataset also shows a high correlation of 0,601 (pooled result). Thirdly, there is a very strong negative pooled result of -0,897 when analysing the difference between (EPS-HEPS) and (HEPS-CFPS). An interesting observation was that although individual yearly results were showing high correlations, the pooled results did not reflect the same tendency. Validated findings attained through statistical testing in this study will in future allow analysts to predict the behaviour of one variable based on the performance of another variable. / AFRIKAANSE OPSOMMING: Die fokus van hierdie studie is om tendense tussen drie verskillende prestasieveranderlikes vir alle genoteerde nywerheidsaandele op die Johannesburgse Effektebeurs te ontleed. Die drie veranderlikes is verdienste per aandeel (VPA), wesensverdienste per aandeel (WVPA) en kontantvloei uit bedryfsaktiwiteite per aandeel (KBAPA). Steekproef A verteenwoordig data vanaf 1974 tot 1999 en Steekproef B vanaf 1990 tot 1999. Teen die einde van 1999 was daar steeds maatskappye wat nie die wesensverdienste per aandeel in hulle finansiële verslae rapporteer nie. 'n Lys van hierdie maatskappye is aangeheg as "Bylae A". In totaal is 21 verskillende kombinasies van die veranderlikes getoets vir onderlinge afhanklikheid. Die ondersoek het drie betekenisvolle verhoudings gelewer. Eerstens is daar 'n hoë onderlinge afhanklikheid tussen verdienste per aandeel en kontantvloei uit bedryfsaktiwiteite per aandeel. Die saamgevoegde resultate vanaf 1974 tot 1999 is 0,636, wat 'n positiewe verhouding tussen die twee veranderlikes bevestig. Tweedens toon die resultate van dieselfde twee veranderlikes van Steekproef B se datastel ook 'n hoë onderlinge afhanklikheid van 0,601 (saamgevoegde restultate). Derdens is daar 'n baie sterk negatiewe resultaat van -0,897 wanneer die verskil tussen (VPA-WVPA) en (WVPA-KBAPA) ontleed word. 'n Interessante waarneming was dat, alhoewel individuele jaarlikse resultate hoë onderlinge afhanklikheid getoon het, die saamgevoegde resultate nie dieselfde neiging weerspieël het nie. Geldige bevindinge, verkry deur statistiese proefneming in hierdie studie, sal analiste in die toekoms toelaat om die gedrag van een veranderlike te voorspel gebaseer op die prestasie van 'n ander veranderlike.

Thesis (MBA)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: This research involves the study of the relationship between share prices, earnings per share, dividends per share and cash flow per share. The aim is to estimate the extent of the effect of earnings per share, dividends per share and cash flow per share on share prices. A sample of industrial companies, all listed on the Johannesburg Stock Exchange is used. The sample includes 17 sectors, containing a total of 326 companies. The data relating to these companies is sourced from the database of the University of Stellenbosch Business School. Twenty consecutive years of reported financial results are used. This includes (i) share prices as at the company's year-end, (ii) earnings per share, (iii) dividends per share and (iv) cash flow per share for the financial year. The data for each individual company is arranged in three separate structures. One structure, known as levels, is created using the data in their original form. A second structure, first differences, is constructed using the annual changes in the original data. The third structure, first difference percentages, is created using the annual changes in the original data calculated as a percentage of the previous year's figure. Several methods are used to analyse data, by way of statistical models known as linear regression, multiple regression and stepwise regression, which is a variation of multiple regression. Regression analysis is used in deterministic models because the value of one variable is predicted on the basis of other variables. Such models are called deterministic because they allow users of data to determine the value of the dependent variable from the value of the independent variable(s). Linear regression is capable of calculating the relationship between variables, which are dependent on each other and represents the dependency as a percentage. Multiple regression is a statistical model, which calculates and represents the relationship between three or more variables as an equation. Multiple regression is capable of calculating the relationship between the three or more variables which are dependent on each other and represents the dependency as a percentage. The statistical models are applied to each company individually, based on the three structures of the data. The conclusions of this research are based upon the results of the dependency of the variables, calculated by the various statistical models. The conclusions arrived at were that (1) the first differences structure is best suited to this model, (2) by placing the data of individual companies together in one pool, the problem of weighing each company was overcome, and (3) using linear regression results together with the multiple and stepwise regression results added value in terms of comparison of the accuracy of results. A comparison was drawn between the findings of this study and those of previous writers and is referred to in the text. Four researchers namely Strong, Board and Day, Brown and Mara-Tjingaete, regressed the results of earnings versus share price and produced R2 values of 12,8 percent, 13 percent, 7 percent and 7,8 percent respectively. Brown and Mara-Tjingaete found R2 results of 14 percent and 0,6 percent respectively for dividends versus share price and this study also produced an R2 result of 0,4 percent for cash flow versus share price. / AFRIKAANSE OPSOMMING: Hierdie navorsing behels die studie van die verwantskap tussen aandeelpryse, verdienste per aandeel, dividende per aandeel en kontantvloei per aandeel. Die doel daarvan is om die uitwerking van verdienste per aandeel, dividend per aandeel en kontantvloei per aandeel op aandeelpryse te bereken. 'n Steekproef van industriële maatskappye genoteer op die Johannesburgse Effektebeurs is gebruik. Die steekproef strek oor 17 sektore en sluit 326 maatskappye in. Die data van hierdie maatskappye is verkry van die databank van die Universiteit van Stellenbosch Bestuurskool. Twintig opeenvolgende jare se gepubliseerde finansiële state word in die steekproef gebruik. Dit sluit in (i) aandeelpryse soos op die maatskappye se finansiële jaareinde, (ii) verdienste per aandeel, (iii) dividende per aandeel en (iv) kontantvloei per aandeel vir die finansiële jaar. Die data vir elke maatskappy is in drie verskillende strukture gerangskik. Een struktuur, bekend as vlakke, is geskep deur die data in hulle oorspronklike vorm te gebruik. 'n Tweede struktuur, eerste verskille, is saamgestel deur die jaarlikse verandering in die oorspronklike data te gebruik. Die derde struktuur, eerste verskille-persentasies, is geskep deur die jaarlikse veranderinge in die oorspronklike data, bereken as 'n persentasie van die vorige jaar se syfer, te gebruik. Verskeie metodes word gebruik om data te ontleed, deur middel van statistiese modelle bekend as lineêre regressie, meervoudige regressie en stapsgewyse regressie, 'n variasie van meervoudige regressie. Regressie ontledings word gebruik in bepalende modelle omdat die waarde van een veranderlike gebruik word as basis om die waarde van die ander veranderlike te probeer voorspel. Sulke modelle word bepalend genoem vanweë die feit dat dit gebruikers van data in staat stel om die waarde van die afhanklike veranderlike te bepaal deur middel van die waarde van die onafhanklike veranderlike(s). Lineêre regressie kan die verwantskap tussen interafhanklike veranderlikes bereken en die afhanklikheid as 'n persentasie uitdruk. Meervoudige regressie is 'n statistiese model wat die verwantskap tussen drie of meer veranderlikes as 'n vergelyking bereken en voorstel. Meervoudige regressie kan die verwantskap tussen drie of meer interafhanklike veranderlikes bereken en die afhanklikheid as 'n persentasie uitdruk. Die statistiese modelle word toegepas op elke individuele maatskappy, gebaseer op die bogenoemde drie strukture. Die bevindinge van die navorsing is gebaseer op die resultate van die afhanklikheid van die veranderlikes soos deur die verskillende statistiese modelle bereken. Die uiteindelike gevolgtrekking was dat (1) die eerste verskille-struktuur die mees gepaste vir hierdie model is, (2) deur die data van die afsonderlike maatskappye in een poel te plaas, is die probleem van die gewig per maatskappy oorkom, (3) die gebruik van lineêre, meervoudige en stapsgewyse regressie het baie waarde ten opsigte van die vergelyking van akkuraatheid van die resultate toegevoeg. Vergelykings is getref tussen bevindinge in hierdie werkstuk en die van ander navorsers. Vier navorsers, naamlik Strong, Board en Day, Brown en Mara- Tjingaete het R2 resultate vir verdienste per aandeel teenoor aandeelpryse van onderskeidelik 12,8 persent, 13 persent, 7 persent en 7,8 persent gekry. Brown en Mara-Tjingaete het R2 resultate van onderskeidelik 14 persent en 0,6 persent bevind vir dividende per aandeel teenoor aandeelpryse en hierdie studie het ook R2 resultate van 0,4 persent vir kontantvloei per aandeel teenoor aandeelpryse gelewer.

Thesis (MBA)--Stellenbosch University, 2000. / The investing public seeks to have knowledge on the future and anticipated enterprise performance. The starting point for gathering such information is presented in the enterprise financial statements. Secondary data presented by the Business School of the University of Stellenbosch was used. The study focused on finding out the magnitude of reporting cash flows from operating activities using the indirect or direct methods. The study also checked the frequency of reporting value - added statements, and took a forecast view on what the reporting nature is expected to look like in the next financial year-end. The database used in the study included 655 listed and delisted industrial companies in the Johannesburg Stock Exchangeover the ten-year period starting from January 1990 through to December 1999. It is noted that the South African Institute of Chartered Accountants, as stated in Statement AC 118, encourages enterprises to report cash flows from operating activities using the direct method. This is because the direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method. The study noted the rate at which newly listed enterprises report their initial cash flow statements, and the rate at which enterprises listed before 1996 are changing from reporting using the indirect method to the direct method. The results showed that at present South African enterprises are reporting cash flows from operating activities at a higher rate that in other notable Western Countries subscribing to the doctrines of the International Accounting Standards Committee (IASC). The number of enterprises presenting value - added statements has shown an increase, though reporting value - added statements is not yet statutory. For the forecasting exercise part of the study, Brown's linear double exponential smoothing technique was applied.

Thesis (MBA)--University of Stellenbosch, 2002. / ENGLISH ABSTRACT: Returns and the ability to statistically formulate the association between returns and other accounting variables have increased in significance to investors. Over the past three decades substantial effort in the subject-field of accounting research has been devoted to the definition of this association between earnings and firm values. The fundamental issue is the information content of earnings and the value thereof to investors. Usefulness, in the returns/prices context, can be defined as the R2 of the regression of returns/prices on earnings (Lev, 1989: 156). Empirical evidence consistently shows that earnings are a statistically significant explanatory variable. A natural extension aiming at improving the empirical results is to incorporate GAAP-related alternative information. One approach followed by numerous researchers is to decompose earnings into components, and show that the components provide more information than earnings alone. Another approach is to include additional variables such as working capital from operations and cash flow from operations (eFO) in the regression models. The empirical results generally showed that earnings components and other GAAP-related variables have explanatory powers. The improvements in the predictive capability (measured by R2) of these models were restricted. Lev (1989: 181 - 182) suggested an intrepid research direction that departs from GAAP by investigating the alternative definitions of earnings. Limited empirical studies on value-added to date have shown that it is a useful measure of performance. For example, Bao and Bao (1989) empirically demonstrated that value-added is positively associated with firm value in certain industries. The analysis employed, however, was the firm valuation analysis. Recently developed levels and changes analyses were not used. In 1998 Bao and Bao completed another study using earnings as a benchmark. Firm valuation analysis, levels analysis and changes analysis were all performed to evaluate the explanatory power of value-added. The results show that value-added is a significant explanatory variable and its explanatory power is higher than that of earnings. The results obtained in this research project indicate that in the South African context earnings is statistically the most explanatory variable. This is divergent from the findings obtained in other research performed in this area, where value-added was indicated as the statistically most significant variable. It does appear that the explanatory power of valueadded tends to increase over the review period. This can possibly be attributed to the relative novelty of value-added in South Africa as opposed to Europe and the USA. / AFRIKAANSE OPSOMMING: Opbrengste en die vermoë om die verhouding tussen aandeelpryse en rekeningkundige veranderlikes statisties te formuleer, wek toenemende belangstelling by beleggers. Oor die afgelope drie dekades het daar 'n noemenswaardige skuif in die fokus op die vakgebied van rekeningkundige navorsing plaasgevind. Aansienlik meer tyd word gespandeer om die verhouding tussen aandeelpryse en die waarde van firmas te kwantifiseer in statistiese modelle. Die onderliggende begrip vir die navorsing is die informasie-inhoud en die inherente waarde wat opbrengste vir beleggers lewer. Waarde, in die opbrengste/pryse konteks, kan as die R2 van die regressie van aandeelpryse teenoor opbrengste gedefinieer word (Lev, 1989: 156). Empiriese navorsing toon konstant aan dat verdienste 'n statistiese beduinde veranderlike is. Die logiese ontwikkeling gerig op die verbetering van die empiriese resultate is om alternatiewe GAAP veranderlikes te inkorporeer. Een benadering wat deur menige navorsers gevolg is, is om opbrengste in komponente te onderverdeel en sodoende te bewys dat die komponente meer informasie-inhoud verskaf as opbrengste in geheel. 'n Alternatiewe benadering is om addisionele veranderlikes soos bedryfskapitaal en kontantvloei in die regressie modelle in te sluit. In die algemeen toon die empiriese resultate dat die komponente van opbrengste en ander GAAP-verwante veranderlikes wel beskrywende moontlikhede het. Die verbetering in die statistiese vooruitskattings vermoë (gemeet deur R2) van hierdie modelle was wel beperk. Lev (1989: 181 - 182) het 'n radikale nuwe navorsings-benadering voorgestel wat afwyk van GAAP deur alternatiewe definisies van opbrengste te ondersoek. Tot op datum toon die beperkte hoeveelheid empiriese navorsing op toegevoegde waarde dat dit wel 'n noemenswaardige mate van opbrengste is. Byvoorbeeld, Bao en Bao (1989) het empiries bewys dat toegevoegde waarde positief geassosieer is met firma waarde in sekere industrieë. Slegs die firma valuasiemodel is gebruik om die analise uit te voer en nie die onlangs ontwikkelde vlakke en veranderingsanalises nie. In 1998 het Bao en Bao nog 'n studie onderneem met opbrengste as die maatstaf. Firma valuasie, vlakke analise en veranderingsanalise is alles toegepas om die beskrywende moontlikhede van toegevoegde waarde te ondersoek. Die resultate toon dat toegevoegde waarde 'n noemenswaardige beskrywende veranderlike is, meer so as opbrengste. Die resultate van hierdie studie projek toon dat in die Suid-Afrikaanse konteks, verdienste die mees beduidendste statistiese veranderlike is. Dit is teenstrydig met die bevindinge van ander navorsers, waar toegevoegde waarde statisties meer beduidend is. Dit wil wel voorkom asof toegevoegde waarde se statistiese informasie-inhoud toegeneem het oor die relevante periode. Dit kan moontlik toegeskryf word aan die relatiewe onlangse bekendstelling in toegevoegde waarde in Suid-Afrika in teenstelling met Europa en die VSA.