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Capital structure in Saudi Arabian listed and unlisted companiesAl-Dohaiman, Mohammed S. January 2008 (has links)
Although there have been many prior studies of the determinants of capital structure, most have investigated listed companies in countries with well-developed markets and institutions. The main objective of the present study is to extend prior research by investigating both listed and unlisted companies in Saudi Arabia where many cultural and institutional features may have an impact on financing decisions in a different manner to ‘developed’ countries. A further contribution is the application of a systematic statistical approach, using meta-analysis, to summarise the many prior empirical studies. The empirical part of the study investigates 60 listed and 403 unlisted firms over the period 2000-2004 using several regression-based archival techniques including panel data analysis. Robustness checks are carried out to investigate the potential impact of the different methods and alternative measurement proxies. The results show that, in general, companies in Saudi Arabia have substantially lower levels of debt than in many other countries. This finding is related to the very low tax regime and other environmental characteristics. Unlisted firms have more short-term debt but less long-term debt than listed firms, as found in other countries. Despite the profound institutional differences, several firm-specific factors (such as firm size, asset tangibility, profitability, and liquidity) are found to have similar impacts on capital structure decisions in Saudi Arabia as they have in prior research. However, the impact of some factors is different, most likely reflecting lower levels of agency costs in the Saudi Arabian institutional environment.
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Market timing and capital structure in East Asia.January 2003 (has links)
Wong Ho. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2003. / Includes bibliographical references (leaves 64-66). / Abstracts in English and Chinese. / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Literature Review --- p.4 / Chapter 2 --- Data Descrition --- p.9 / Chapter 2.1 --- Definition and Notation of Some Key Variables --- p.11 / Chapter 2.2 --- Summary statistics --- p.12 / Chapter 3 --- Determinants of Annual Changes in Leverage --- p.18 / Chapter 4 --- Determinants of Leverage --- p.33 / Chapter 5 --- Summary and Conclusions --- p.41 / Chapter 6 --- Tables / Chapter 6.1 --- Table 1.1 to 1.6 --- p.43 / Chapter 6.2 --- Table 2 --- p.49 / Chapter 6.3 --- Table 3.1 to3.6 --- p.52 / References --- p.64
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Die indeks-verskil tussen die netto wins na belasting en kontantvloei uit bedryfsaktiwiteite as aanduiding van finansiele probleme by genoteerde industriele maatskappyeSteyn, Barbara Wilhelmina 12 1900 (has links)
Thesis (MBA)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: Both the income statement and the cash flow statement of a company provide useful
information to the user of financial statements. The net profit after tax in the income
statement and the cash from operating activities in the cash flow statement have
basically the same transactions as source, however they still differ, because of timing
differences between the accrual of income and expenses and the cash receipts or
payments thereof, as well as the inclusion of items in the net profit after tax that
rather forms part of cash flow from investment activities.
A growth in turnover usually coincides with an increase in non-cash working capital.
When the company is expanding at too high a rate, too much of his cash resources
are taken up by the increase in non-cash working capital and that could lead to cash
flow problems. This trend can be plotted on a graph, with a growing net profit after tax
and a decline in the cash flow from operating activities. The two lines move away
from each other when there is a significant difference between the net profit after tax
and the cash flow from operating activities.
This study tries to measure the angle between the two lines where they reach the
danger zone. Users of financial statements will be able to use this as an indicator of
companies that are going to be in cash flow trouble over the next period.
In order to measure this angle when the company reaches the danger zone, 365
listed industrial companies were studied. The net profit after tax and the cash flow
from operating activities were both transformed into an index, with cash flow relative
to net profit. The difference between the index strings was calculated. This study only
focuses on companies with an index-difference where the cash flow from operating
activities is smaller than the net profit after tax.
An index-difference of -2 was identified as the possible danger zone. In order to
substantiate this figure, companies with an index-difference of -2 or larger negative
that still were listed at the time of the study were examined to find the reason for the
difference. Items that do not form part of the cash flow from operating activities
cannot be used in the calculation of the index-difference, because it will generate a permanent difference between the net profit after tax and the cash from operating
activities. Companies that have a huge negative index-difference only because of
such items are not in the danger zone.
33 companies with an index-difference of -2 or more negative were identified. Focus
was placed on the thirteen companies that did not have losses and that were still
listed at the time of the study. Six of these companies were removed from the danger
list after the individual examination, because of other reasons for the difference rather
than an increase in non-cash working capital. That leaves seven companies that are
shown by this study to be in danger to get into serious cash flow trouble in the
foreseeable future. A few additional companies were examined which led to another
six companies being placed on the danger list.
Only time will tell whether these companies do get into serious financial difficulty. If
so, the index-difference can be calculated as an indicator of the point when a
company, regardless of a strong growth in turnover, and sometimes because thereof,
does not generate enough cash from operating activities to finance the growth in
non-cash working capital. Unless the company has a holding company that is willing
to pour more cash into the company, or unless the company can do a successful
rights issue, it will find itself in the position where it cannot finance the expansion and
also cannot obtain more additional funding. / AFRIKAANSE OPSOMMING: Beide die inkomstestaat en kontantvloeistaat van 'n maatskappy verskaf nuttige
inligting aan gebruikers van finansiële state. Die netto wins na belasting uit die
inkomstestaat en die kontantvloei uit bedryfsaktiwiteite uit die kontantvloeistaat het
basies dieselfde transaksies as bron, maar verskil tog, hoofsaaklik vanweë tydverskil
in die erkenning van die toevalling van inkomste en uitgawes en die
kontantontvangstes en -betalings daarvan, asook vanweë die insluiting van items in
die netto wins na belasting wat eerder deel vorm van die kontantvloei uit
investeringsaktiwiteite.
Wanneer die maatskappy 'n groei in omset toon, gaan dit gewoonlik gepaard met 'n
toename in nie-kontant bedryfskapitaal. Wanneer die maatskappy te vinnig groei,
word te veel van sy kontantbronne vasgevang in die verhoogde nie-kontant
bedryfskapitaal en dit kan lei tot kontantvloeiprobleme. Hierdie tendens kan op 'n
grafiek uitgebeeld word met 'n stygende netto wins na belasting, terwyl die
kontantvloei uit bedryfsaktiwiteite daal. Wanneer daar 'n aansienlike verskil tussen
die netto wins na belasting en die kontantvloei uit bedryfsaktiwiteite is, beweeg die
twee lyne uit mekaar.
Dié studie poog om die grootte van die hoek tussen die twee lyne wanneer die
gevaarsone bereik word, te bepaal. Dit kan dan deur gebruikers van die finansiële
state as 'n aanduiding gebruik word om te voorspel watter maatskappye oor die
volgende tydperk kontantvloeiprobleme sal hê.
Ten einde die grootte van die hoek te meet waar die maatskappy die gevaarsone
binne beweeg is 365 genoteerde industriële maatskappye se data bestudeer. Die
netto wins na belasting en die kontantvloei uit bedryfsaktiwiteite is beide as 'n indeks
uitgedruk, laasgenoemde relatief tot eersgenoemde. Die verskil tussen die twee
indeks-reekse is bereken, naamlik die indeks-verskil. Die studie is slegs gefokus op
maatskappye met 'n indeks-verskil waar die kontantvloei uit bedryfsaktiwitete kleiner
is as die netto wins na belasting. 'n Indeks-verskil van -2 is geïdentifiseer as die moontlike gevaarsone. Ten einde
hierdie syfer te steun is die maatskappye wat ten tye van die navorsing steeds
genoteer is en 'n indeks-verskil van -2 of groter negatief het, individueel ondersoek
om die rede vir die indeks-verskil vas te stel. Items wat op 'n ander plek in die
kontantvloeistaat as in die bedryfsaktiwiteite hanteer word, kan nie in ag geneem
word in die berekening van die indeks-verskil nie, aangesien dit 'n permanente
afwyking tussen die netto wins na belasting en kontant uit bedryfsaktiwiteite sal
veroorsaak. Maatskappye wat dus bloot as gevolg van sodanige items 'n groot
negatiewe indeks-verskil het, val nie in die gevaarsone nie.
33 maatskappye is geïdentifiseer met 'n indeks-verskilvan -2 of groter negatief. Daar
is gefokus op die dertien maatskappye wat nie verliese gely het nie en steeds ten tye
van die afhandeling van die studie genoteer was. Ses van hierdie maatskappye is
tydens die individuele ondersoek van die gevaarlys gehaal aangesien daar ander
redes vir die groot indeks-verskil was as 'n toename in nie-kontant bedryfskapitaal.
Dit laat dan sewe maatskappye wat deur dié studie aangedui word as om moontlik
finansiële probleme op te tel binne die afsienbare toekoms. 'n Paar addisionele
maatskappye is ondersoek, waarna 'n verdere ses op die gevaarlys geplaas is.
Slegs die tyd sal leer of die betrokke maatskappye wel in 'n finansiële verknorsing
beland. Indien wel, kan hierdie indeks-verskil bereken word en as 'n aanduiding
gebruik word van die punt wanneer 'n maatskappy, in baie gevalle ten spyte van
goeie groei in omset, maar dan ook juis as gevolg daarvan, nie genoeg kontant uit
bedryfsaktiwiteite genereer om die groei in nie-kontant bedryfskapitaal te finansier
nie. Tensy die maatskappy 'n houermaatskappy het wat bereid is om nog kontant te
stort in die maatskappy, of tensy die maatskappy 'n suksesvolle regte-uitgifte kan
maak, vind hy homself in die posisie dat hy nie die uitbreiding kan finansier nie en dat
hy ook nie meer addisionele finansiering kan bekom nie.
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The effect of the changing economical environment on the capital structure of South African listed industrial firmsMans, Nadia 03 1900 (has links)
Thesis (MComm (Business Management))--University of Stellenbosch, 2010. / ENGLISH ABSTRACT:
The determinants of capital structure form an important part of the finance profession.
Contemporary capital structure theory began in 1958 when Modigliani and Miller
indicated that in a perfect capital market, the value of a firm is not influenced by its
capital structure. However, when considering, inter alia, the effect of taxes, bankruptcy
costs and asymmetric information, the value of a firm could be affected by its leverage.
Capital structure theory offers two contrasting capital structure models, namely the
trade-off and pecking order models. According to the trade-off model, firms trade-off
the costs and benefits of debt financing in order to reach an optimal capital structure.
According to this model, a positive relationship exists between leverage and
profitability. In contrast, the pecking order model indicates that firms use a financing
hierarchy where internal funds are preferred above debt and equity usage. This model
indicates a negative relationship between leverage and profitability. However, in
practice, firms often deviate from these models to incorporate the benefits of the other
model or to adapt to changing circumstances.
Firms' financing decisions may be influenced by both firm-specific and economical
factors within the country where they are operating. Therefore, a firm's managers should
consider the growth rate, interest rate, repo rate, inflation rate, exchange rates and the
tax rate when conducting finance decisions, since these factors could influence the cost
and availability of capital. In addition, these economical factors often have a significant
influence on each other.
Prior capital structure research mainly focused on developed countries. However, South
Africa provides the ideal environment to consider the effect of economic changes on
capital structure within a developing country, due to South Africa's profound economic
changes during 1994 and the years to follow. The primary objective of this study was
thus to determine whether the capital structures of South African listed industrial firms
are influenced by changes in the South African economical environment.
The effect of economic changes on capital structure was examined by using a
TSCSREG (time-series cross-section regression) procedure. The regression model is
based on a model developed by Fan, Titman and Twite (2008). One-period lags were built into the model to make provision for the effect of economic changes that often
only occur after some time. The study was conducted on a sample of firms listed on the
industrial sector of the Johannesburg Securities Exchange (JSE Ltd) over the period
1989 to 2008.
The data, required to calculate the measures, were obtained from the South African
Reserve Bank, the South African Revenue Service and the McGregor BFA database.
This database contains standardised financial statements for both listed and delisted
South African firms. In an attempt to reduce the possible skewing of results due to
survivorship bias, both listed and delisted firms were included in the sample. In order to
reflect its true nature, data should be available for consecutive years. Therefore, only
firms with data available for more than five years were included in the final sample. The
resulting sample consisted of 320 firms and 4 172 observations. The sample was also
divided into years before and years after 1994, in order to determine the effect of the
economic changes during 1994 and the years to follow on the firms' capital structures. The results of this study indicated that some of the economic factors influenced the D/E
ratio as well as each other. However, the effect of economic changes often only
occurred after a lagged period. A strong relationship was indicated between the tax rate
and the repo rate, which influenced the significance of the regression results. Support
was found for both the trade-off and the pecking order models. The combined
profitability variable ROA-ROE also had a significant effect on the other variables.
Based on these results, the claim that economic changes have an impact on capital
structure is supported. The effect is often only indicated after a certain period. It also
seems that the combination of the two capital structure models have a significant effect
on leverage. Firms therefore appear to consider a combination of these models when
conducting finance decisions. / AFRIKAANSE OPSOMMING:
Die determinante van kapitaalstruktuur speel belangrike rol in die finansiële professie.
Hedendaagse kapitaalstruktuurteorie het in 1958 tot stand gekom toe Modigliani en
Miller aangedui het dat die waarde van 'n firma in 'n perfekte kapitaalmark nie deur
kapitaalstruktuur beïnvloed word nie. Maar, wanneer die uitwerking van onder andere
belastings, die koste van bankrotskap en asimmetriese inligting in ag geneem word, kan
die waarde van 'n firma deur sy finansiële hefboomwerking beïnvloed word.
Kapitaalstruktuurteorie bied twee kontrasterende kapitaalstruktuurmodelle, naamlik die
ruilmodel (trade-off model) en rangorde-model (pecking order model). Volgens die
ruilmodel vergelyk firmas die kostes en voordele van finansiering met geleende kapitaal
totdat 'n optimale kapitaalstruktuur bereik word. Hierdie model dui op die bestaan van 'n
positiewe verband tussen hefboomwerking en winsgewendheid. In teenstelling hiermee
dui die rangorde-model aan dat firmas 'n finansieringshiërargie gebruik waar interne
fondse verkies word bo skuld en ekwiteit. Hierdie model dui 'n negatiewe verband aan
tussen hefboomwerking en winsgewendheid. In die praktyk wyk firmas egter dikwels af
van hierdie modelle om die voordele van die ander model te inkorporeer of om by
veranderende omstandighede aan te pas.
Firmas se finansieringsbesluite kan beïnvloed word deur beide firma-spesifieke en
ekonomiese faktore in die land waar hulle sake doen. Daarom moet 'n firma se
bestuurders die groeikoers, rentekoers, inflasiekoers, wisselkoerse en die belastingkoers
oorweeg wanneer hulle finansieringsbesluite neem, aangesien hierdie faktore moontlik
die koste en beskikbaarheid van kapitaal kan beïnvloed. Hierdie ekonomiese faktore het
dikwels ook 'n belangrike invloed op mekaar.
Vroeëre navorsing insake die kapitaalstruktuur het dikwels op ontwikkelde lande
gefokus. Suid-Afrika bied egter die ideale omgewing om die uitwerking van
ekonomiese veranderinge op kapitaalstruktuur in 'n ontwikkelende land te ondersoek as
gevolg van Suid-Afrika se betekenisvolle ekonomiese veranderinge gedurende 1994 en
die daaropvolgende jare. Die primêre doelwit van hierdie studie was dus om te bepaal of
die kapitaalstruktuur van genoteerde Suid-Afrikaanse nywerheidsondernemings deur
veranderinge in die Suid-Afrikaanse ekonomiese omgewing beïnvloed word. Die uitwerking van ekonomiese veranderinge op kapitaalstruktuur is ondersoek deur
gebruik te maak van 'n TSCSREG (tydreeks dwarssnit-regressie)-prosedure. Hierdie
regressiemodel is gebaseer op 'n model wat deur Fan, Titman en Twite (2008)
ontwikkel is. Enkeltydperk-vertragings is in die model ingebou om voorsiening te maak
vir die uitwerking van ekonomiese veranderinge wat dikwels eers ná 'n tydperk sigbaar
word. Die studie is uitgevoer op 'n steekproef firmas wat gedurende die tydperk 1989 tot
2008 op die nywerheidsektor van die Johannesburgse Sekuriteitebeurs (JSE Ltd)
genoteer is.
Die nodige data om die metings te bereken is verkry van die Suid-Afrikaanse
Reserwebank (SARB), die Suid-Afrikaanse Inkomstediens (SAID) en die McGregor
BFA-databasis. Hierdie databasis bevat gestandaardiseerde finansiële state vir beide
genoteerde en gedenoteerde Suid-Afrikaanse firmas. In 'n poging om die moontlike
skeeftrekking van resultate as gevolg van die oorlewingsneiging te verhoed, is beide
genoteerde en gedenoteerde firmas by die steekproef ingesluit. Data moet vir
opeenvolgende jare beskikbaar wees om die ware aard daarvan aan te dui. Daarom is
slegs firmas met data beskikbaar vir meer as vyf jaar in die finale steekproef ingesluit.
Die steekproef het gevolglik 320 firmas en 4 172 waarnemings behels. Die steekproef is
ook in jare voor en jare ná 1994 verdeel, om die uitwerking van ekonomiese
veranderinge gedurende 1994 en die daaropvolgende jare op firmas se kapitaalstruktuur
te bepaal.
Die bevindinge van die studie het daarop gedui dat sommige van die ekonomiese
faktore die skuld/ekwiteit (D/E)-verhouding, maar ook elkeen van hulle beïnvloed het.
Die uitwerking van ekonomiese veranderinge het egter dikwels eers ná 'n vertraagde
tydperk sigbaar geword. 'n Sterk verhouding is aangedui tussen die belastingkoers en
die repokoers, wat die betekenisvolheid van die regressieresultate beïnvloed het.
Ondersteuning is gevind vir beide die ruilmodel en die rangorde-model. Die
gekombineerde winsgewendheidsveranderlike ROA-ROE het ook 'n betekenisvolle
uitwerking op die ander veranderlikes gehad.
Die bewering dat ekonomiese veranderinge 'n impak op die kapitaalstruktuur het, word
ondersteun op grond van die bevindinge van hierdie studie. Die uitwerking daarvan
word egter dikwels eers ná 'n tydperk sigbaar. Die gekombineerde
kapitaalstruktuurmodelle het moontlik 'n betekenisvolle uitwerking op
hefboomwerking. Dit wil dus voorkom of firmas 'n kombinasie van hierdie modelle
oorweeg wanneer hulle finansieringsbesluite neem.
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Investigating growth within a companyDreyer, Johann 12 1900 (has links)
Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: The sustainable growth rate of a company is investigated, by comparing the self-financeable growth rate as defined by Churchill and Mullins (2001), with the cash flow sustainable growth rate as defined by Hamman (1996). The purpose of this research is to identify the behaviour, characteristics and benefits that each rate displays by investigating changes in sales growth, profit margins, working capital and cash flow analysis. The biggest difference between the self-financeable growth rate (Churchill & Mullins, 2001) and the cash flow sustainable growth rate (Hamman, 1996) is the definition of cash as generated from sales (self-financeable growth rate) and cash generated from operating activities (cash flow sustainable growth rate). Cash generated from sales includes accounts receivable or payable, and represents the amount of cash that is available to reinvest in the growth of a company (according to the self-financeable growth rate). Because this cash (calculated for the self-financeable growth rate) is not immediately realised, the cash flow sustainable growth rate (based on cash flow from operating activities) represents a better measurement of cash available for reinvestment. If the percentage sales growth is less than the cash flow sustainable growth rate (Hamman, 1996), a positive sustainable cash flow from operating activities will be generated. The report also shows this to be true, when the self-financeable growth rate is less than or equal to the cash flow sustainable growth rate. When the growth in sales exceeds the cash flow sustainable growth rate, negative cash flow from operating activities is experienced. This is an indication that internal funding to support the working capital requirements is insufficient and external funding is required. In this investigation the self-financeable growth rate (Churchill & Mullins, 2001), always reflects a positive cash flow from operating activities, regardless of whether the percentage sales growth is higher or lower than that of the self-financeable growth rate. This leads to the question: What check is used to ascertain a company's sustainable performance when using the self-financeable growth rate? That is, if the self-financeable growth rate is exceeded by the sales growth, what indicator becomes relevant under the specific circumstances? As highlighted by Churchill and Mullins (2001), the benefits of sustainable growth rates, provide insight into the short and long-term decisions in a company with regards to: • Reducing overall costs • Changing the profit margins • Managing the working capital requirements • Changing the operating cash cycle. What matters most is not how fast a company can grow its business, but the way in which it is managed. Increasing competitiveness requires innovative ways of optimising resources, but without efficient management of cash flow, a company is most likely to fail. This report, illustrates that, compared to the self-financeable growth rate, the cash flow sustainable growth rate is a more effective tool, in addressing sustainable growth and the management of cash. / AFRIKAANSE OPSOMMING: 'n Maatskappy se volhoubare groeikoers word ondersoek deur 'n vergelyking te tref tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996). Die doel van die navorsing, is om die verandering in verkope, winsgrense, bedryfskapitaal en die kontantvloei ontleding te ondersoek, ten einde die aard, kenmerke en voordele van die groeikoerse te bepaal. Die grootste verskil tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996) is die definisie van die kontant gegenereer uit verkope (self-gefinansierde groeikoers) en die kontant gegenereer uit bedryfsaktiwiteite (kontantvloei volhoubare groeikoers). Kontant gegenereer uit verkope sluit in rekeninge ontvangbaar of betaalbaar en verteenwoordig die bekikbaarheid van kontant wat herbele kan word in 'n maatskappy se groei (volgens die self-gefinansierde groeikoers). Omdat die kontant (self-gefinansierde groeikoers) nie ommiddelik gerealiseer kan word nie, is die kontantvloei volhoubare groeikoers (kontant gegenereer uit bedryfsaktiwiteite) 'n beter verteenwoordiger van beskikbare kontant wat herbele kan word. As die presentasie groei in verkope minder is as die kontantvloei volhoubare groeikoers (Hamman, 1996) sal 'n positiewe volhoubare kontantvloei vir bedryfsaktiwiteite gegenereer word. Die verslag dui aan dat bogenoemde ook geld, as die self-gefinansierde groeikoers kleiner of gelyk is aan die kontantvloei volhoubare groeikoers. Wanneer die groei in verkope groter word as die kontantvloei volhoubare groeikoers, word negatiewe kontantvloei vir bedryfsaktiwiteite gegenereer. Hierdie is 'n aanduiding dat die interne befondsing wat benodig word om die bedryfskapitaal te bevredig, nie voldoende is nie en eksterne befondsing benodig word. In hierdie ondersoek reflekteer die self-gefinansierde groeikoers (Churchill & Mullins, 2001) altyd 'n positiewe kontantvloei vir bedryfsaktiwiteite, ongeag of die groei in verkope groter of kleiner is as die van die self-gefinansierde groeikoers. Dit lei tot die volgende vraag: Watter maatslaf word gebruik om die volhoubare groei van 'n maatskappy te bepaal as die self-gefinansierde groeikoers toegepas word? Anders gestel, as die groei in verkope, die self-gefinansierde groeikoers oorskry, watter toepaslike aanduiding is relevant onder hierdie omstandighede? Soos beklemloon deur Churchill en Mullins (2001), gee die voordele van volhoubare groeikoerse, insig in kort en langtermyn besluite in 'n maatskappy met betrekking tot: • Vermindering van totale koste • Verandering in winsgrense • Bestuur van bedryfskapitaal behoeftes • Verandering in die bedryfs kontant siklus. Wat van belang is, is nie hoe vinnig 'n maatskappy kan groei nie, maar wat die beste manier is, om dit te bestuur. 'n Verhoging in kompetisie, benodig innoverende maniere om bronne te kan optimiseer en sonder effektiewe betuur van kontant, bestaan die moontlikheid dat 'n maatskappy hierin kan misluk. Hierdie verslag illuslreer, deur te vergelyk met die van die self-gefinansierde groeikoers, dat die kontantvloei volhoubare groeikoers 'n beter, effektiewe maatstaf is, wat betref die adressering van volhoubare groei en die bestuur van kontant.
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Predicting corporate credit ratings using neural network modelsFrank, Simon James 12 1900 (has links)
Thesis (MBA (Business Management))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: For many organisations who wish to sell their debt, or investors who are looking to invest in an organisation, company credit ratings are an important surrogate measure for the
marketability or risk associated with a particular issue. Credit ratings are issued by a limited number of authorised companies – with the predominant being Standard & Poor’s, Moody’s
and Fitch – who have the necessary experience, skills and motive to calculate an objective
credit rating. In the wake of some high profile bankruptcies, there has been recent conjecture about the accuracy and reliability of current ratings. Issues relating specifically to the lack of competition in the rating market have been identified as possible causes of the poor
timeliness of rating updates. Furthermore, the cost of obtaining (or updating) a rating from
one of the predominant agencies has also been identified as a contributing factor. The high
costs can lead to a conflict of interest where rating agencies are obliged to issue more
favourable ratings to ensure continued patronage.
Based on these issues, there is sufficient motive to create more cost effective alternatives to
predicting corporate credit ratings. It is not the intention of these alternatives to replace the
relevancy of existing rating agencies, but rather to make the information more accessible,
increase competition, and hold the agencies more accountable for their ratings through better
transparency. The alternative method investigated in this report is the use of a backpropagation artificial neural network to predict corporate credit ratings for companies in the manufacturing sector of the United States of America. Past research has shown that backpropagation neural
networks are effective machine learning techniques for predicting credit ratings because no prior subjective or expert knowledge, or assumptions on model structure, are required to
create a representative model. For the purposes of this study only public information and
data is used to develop a cost effective and accessible model. The basis of the research is the assumption that all information (both quantitive and qualitative) that is required to calculate a credit rating for a company, is contained within financial data from income statements, balance sheets and cash flow statements. The premise of the assumption is that any qualitative or subjective assessment about company creditworthiness will ultimately be reflected through financial performance. The results show that a backpropagation neural network, using 10 input variables on a data
set of 153 companies, can classify 75% of the ratings accurately. The results also show that
including collinear inputs to the model can affect the classification accuracy and prediction
variance of the model. It is also shown that latent projection techniques, such as partial least squares, can be used to reduce the dimensionality of the model without making any
assumption about data relevancy. The output of these models, however, does not improve
the classification accuracy achieved using selected un-correlated inputs. / AFRIKAANSE OPSOMMING: Vir baie organisasies wat skuldbriewe wil verkoop, of beleggers wat in ʼn onderneming wil belê is ʼn maatskappy kredietgradering ’n belangrike plaasvervangende maatstaf vir die bemarkbaarheid van, of die risiko geassosieer met ʼn betrokke uitgifte. Kredietgraderings word deur ʼn beperkte aantal gekeurde maatskappye uitgereik – met die belangrikste synde Standard & Poor’s, Moody’s en Fitch. Hulle het almal die nodige ervaring, kundigheid en rede om objektiewe kredietgraderings te bereken. In die nadraai van ʼn aantal hoë profiel bankrotskappe was daar onlangs gissings oor die akkuraatheid en betroubaarheid van huidige graderings. Kwessies wat spesifiek verband hou met die gebrek aan kompetisie in die graderingsmark is geïdentifiseer as ‘n moontlike oorsaak vir die swak tydigheid van gradering opdatering. Verder word die koste om ‘n gradering (of opdatering van gradering) van een van die dominante agentskappe te bekom ook geïdentifiseer as ʼn verdere bydraende faktor gesien. Die hoë koste kan tot ‘n belange konflik lei as graderingsagentskappe onder druk kom om gunstige graderings uit te reik om sodoende volhoubare klante te behou. As gevolg van hierdie kwessies is daar voldoende motivering om meer koste doeltreffende alternatiewe vir die skatting van korporatiewe kredietgraderings te ondersoek. Dit is nie die doelwit van hierdie alternatiewe om die toepaslikheid van bestaande graderingsagentskappe te vervang nie, maar eerder om die inligting meer toeganklik te maak, mededinging te verhoog en om die agentskappe meer toerekenbaar vir hul graderings te maak deur beter
deursigtigheid. Die alternatiewe manier wat in hierdie verslag ondersoek word, is die gebruik van ‘n kunsmatige neurale netwerk om die kredietgraderings van vervaardigingsmaatskappye in die VSA te skat. Vorige navorsing het getoon dat neurale netwerke doeltreffende masjienleer
tegnieke is om kredietgraderings te skat omdat geen voorafkennis of gesaghebbende kundigheid, of aannames oor die modelstruktuur nodig is om ‘n verteenwoordigende model te bou. Vir doeleindes van hierdie navorsingsverslag word slegs openbare inligting en data gebruik om ʼn kostedoeltreffende en toeganklike model te bou. Die grondslag van hierdie navorsing is die aanname dat alle inligting (beide kwantitatief en
kwalitatief) wat benodig word om ʼn kredietgradering vir ʼn onderneming te bereken, opgesluit is in die finansiële data in die inkomstestate, balansstate en kontantvloei state. Die aanname is dus dat alle kwalitatiewe of subjektiewe assessering oor ‘n maatskappy se
kredietwaardigheid uiteindelik in die finansiële prestasie sal reflekteer. Die resultate toon dat ʼn neurale netwerk met 10 toevoer veranderlikes op ‘n datastel van 153 maatskappye 75% van die graderings akkuraat klassifiseer. Die resultate toon ook dat die insluiting van kollineêre toevoere tot die model die klassifikasie akkuraatheid en die variansie van die skatting kan beïnvloed. Daar word verder getoon dat latente projeksietegnieke, soos parsiële kleinste kwadrate, die dimensies van die model kan verminder sonder om enige aannames oor data toepaslikheid te maak. Die afvoer van hierdie modelle verhoog egter nie die klassifikasie akkuraatheid wat behaal is met die gekose ongekorreleerde toevoere nie. 121 pages.
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Determining the minimum free cash flow required for capital intensive organisationsVan Eeden, Anita 03 1900 (has links)
Thesis (MBA)--Stellenbosch University, 2009. / ENGLISH ABSTRACT: In financial accounting and economics it is important to be in a position to determine
replacement costs of assets. These costs are essential for application of inflation accounting ,
the calculation of Tobin's q ratio, as well as the calculation of the free cash flow (FCF) of a
company. However, it proves to be a daunting challenge to calculate especially accurate
replacement costs of a company's fixed assets, owing to the considerable effects that
inflation, economic lifetime of fixed assets and procurement strategies have on the
replacement cost, and consequently on the FCF of a firm .
In determining the FCF of a company, it is essential to differentiate between the goals of a
company to maintain fixed assets or to expand operations. This split is difficult to ascertain,
as few companies in South Africa publish the split. In addition to this, it is important to
distinguish between actual required replacement investment (RI) and that part of the RI that
has conveniently been postponed. As a consequence, analysis of a company's financial
statements to determine replacement costs and subsequent FCF is further complicated.
In 2001 , Hall investigated the behaviour of the average age of fixed assets as calculated with
the Cutler and Westwick (1973: 17) formula , by developing specific inflation adjustment
models. Hall's (2001: 40) study provided insight into some of the factors that might influence
the application of the Cutler and Westwick formula for the calculation of the average age of a
firm 's fixed assets. This research report developed Hall's models further, and proved that the
average age of fixed assets, as used in the determination of replacement cost of a
company's fixed assets, could only be applied in zero inflation conditions. In positive inflation
periods, the average age of fixed assets as per Cutler and Westwick's formula is
understated, resulting in lower estimations of replacement costs. Consequently, the
additional depreciation as determined for inflation accounting purposes is understated.
In this research report, the models referred to above were developed further to determine the
required maintenance (or RI) part of the investing decision relative to depreciation written off.
This enabled the modelling of FCF for companies, assuming certain model restrictions, such
as constant inflation, evenroll fixed asset replacement and similar economic lifetimes for all
fixed assets. However, this only provides some insight into the trends of additional
deprecation required for different situations, and cannot be used in practice as comparable
practical situations do not exist.
This study therefore concludes that the calculation of replacement cost for inflation
accounting purposes proves to be a very complex problem. No simple or quick model
currently exists for determining the replacement costs of fixed assets and subsequent FCF of
a firm. It is recommended that, when determining the replacement costs of fixed assets, the
detailed fixed asset register of the firm should be consulted in order to determine the unique
asset investment and replacement strategies, as well as the split of the fixed assets in terms
of different economic lifetimes. Once this information is available, unique models per
company could be developed based on the applicable inflation rates. / AFRIKAANSE OPSOMMING: In finansiële rekeningkunde en ekonomie is dit belangrik om die vervangingswaarde van
bates te kan bereken. Hierdie waardes is essensieël vir die toepassing van
inflasieboekhouding, die berekening van Tobin se q-verhouding, sowel as die berekening van
die vrye kontantvloei (VKV) van 'n maatskappy. Dit blyk egter 'n moeilike taak te wees om
veral akkurate vervangingswaardes vir 'n maatskappy se vaste bates te bereken, as gevolg
van die groet invloed wat inflasie, die ekonomiese leeftyd van die vaste bates en
aankoopstrategieë het op die vervangingswaarde, en gevolglik op die VKV van 'n maatskappy.
In die bepaling van die VKV van 'n maatskappy, is dit noodsaaklik om te onderskei tussen
die doelwitte van die maatskappy om vaste bates te onderhou of om werksaamhede uit te
brei. Hierdie onderskeid is moeilik om te bepaal, aangesien min maatskappye in Suid-Afrika dit publiseer. Ook is dit belangrik om te onderskei tussen werklik benodigde
vervangingsinvestering (VVI) en daardie gedeelte van die VVI wat gerieflikheidshalwe
uitgestel is. Die ontleding van 'n maatskappy se finansiële state ten einde
vervangingswaarde en die daaropvolgende VKV te bereken, word gevolglik verder
gekompliseer.
In 2001 het Hall die gedrag van die gemiddelde ouderdom van vaste bates ondersoek met
behulp van die Cutler en Westwick (1973: 17) formule, deur spesifieke inflasie aangepaste
modelle te ontwikkel. Hall (2001 : 40) se studie het insig gebied in sommige van die faktore
wat die toepassing van die Cutler en Westwick formule vir die berekening van die
gemiddelde ouderdom van 'n maatskappy se vaste bates kan beïnvloed. Hierdie
navorsingsverslag ontwikkel Hall se modelle verder en bewys dat die gemiddelde ouderdom
van vaste bates, soos gebruik in die beraming van die vervangingswaarde van 'n
maatskappy se vaste bates, net toegepas kan word in toestande van nul inflasie. In periodes
van positiewe inflasie word die gemiddelde ouderdom, soos bepaal deur die Cutler en
Westwick formule, te laag opgegee, met 'n gevolglike laer skatting van vervangingswaarde.
Dit lei daartoe dat die addisionele waardevermindering, soos bepaal vir
inflasieboekhoudingsdoeleindes, te laag opgegee word.
In hierdie navorsingsverslag word die modelle waarna hierbo verwys is verder ontwikkel ten
einde die vereiste instandhoudings- (of VVI-) gedeelte van die investeringsbesluit relatief tot waardevermindering te bepaal. Dit maak dit moontlik om die VKV van maatskappye te
modelleer, met sekere modelbeperkings wat veronderstel word, soos konstante inflasie,
vaste batevervanging volgens 'n harmonies opgeboude masjienpark, en soortgelyke
ekonomiese leeftye vir aile vaste bates. Dit bied egter net 'n mate van insig in die patrone
van addisionele waardevermindering wat vir verskillende situasies benodig word en kan nie
in die praktyk aangewend word nie, aangesien vergelykbare praktiese situasies nie bestaan
nie.
Hierdie studie kom dus tot die gevolgtrekking dat die berekening van vervangingskostes vir
die toepassing van inflasieboekhouding 'n baie komplekse probleem is. Geen maklike of
vinnige model bestaan tans vir die bepaling van die vervangingswaarde van vaste bates en
die gevolglike VKV van 'n maatskappy nie. Daar word aanbeveel dat, wanneer die
vervangingswaarde van vaste bates bereken word, die gedetailleerde vaste bateregister van
die maatskappy geraadpleeg moet word ten einde die unieke investering- en
vervangingstrategieë, sowel as die skeiding van die vaste bates op grand van verskillende
ekonomiese leeftye, te kan bepaal. Sodra hierdie inligting beskikbaar is, kan unieke modelle vir die maatskappy ontwikkel word op grand van die toepaslike inflasiesyfers.
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Studies in the effectiveness of cash flows from operating and investing activities as possible early indicators of bankruptcyJanuary, Carol 12 1900 (has links)
Thesis (MBA)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: Users of Cash Flow Statements expect the information provided as cash flow from
operating and investing activities to serve as a possible indicator that the company is
facing bankruptcy. Traditionally, companies disclose depreciation as an operating activity
and replacement of fixed assets as an investing activity. Companies that direct cash
payments toward dividend and future expansion without addressing replacement of fixed
assets are creating an unrealistic picture of their operating and investing activities.
Generally accepted accounting practices (GAAP) have limited its disclosure requirements
and has not addressed the issue of separating the expansion of fixed assets from
replacement.
This mini-study project researches the impact of disclosing depreciation as an investing
activity and the replacement of fixed assets as an operating activity.
Based on the findings, it is recommended that GAAP make it a requirement that the
replacement and expansion of fixed assets be disclosed separately. It is further
recommended that either depreciation be disclosed as an investing activity, or that
replacement of fixed assets be disclosed as an operating activity on the Cash Flow
Statement.
The methods of disclosure investigated in the study will lead to an improvement in the
ability of the two activities to serve as possible early indicators of bankruptcy. / AFRIKAANSE OPSOMMING: Gebruikers van kontantvloeistate verwag dat die inligting wat verskaf word van die
bedryfs- en investeringsaktiwiteite as 'n moontlike indikator van die ondergang van die
onderneming moet kan dien. Waardevermindering word tradisioneel as 'n
bedryfsaktiwiteit openbaar, terwyl die vervanging van vaste bates as 'n
investeringsaktiwiteit openbaar word. Ondernemings wat direkte kontantbetalings as
dividende en toekomstige uitbreiding openbaar sonder dat die vervanging van vaste bates
aangespreek word, skep 'n onrealistiese beeld van hul bedryfs- en investeringsaktiwiteite.
Algemeen aanvaarde rekeningkundige beginsels het die openbaarmakingsvereistes
beperk en spreek nie die skeiding tussen uitbreiding van bates en die vervanging daarvan
aan nie.
Hierdie mini-werkstuk ondersoek die impak van die openbaarmaking van
waardevermindering as 'n investeringsaktiwiteit en vervanging van vaste bates as 'n
bedryfsaktiwiteit.
Gebaseer op die bevindinge word daar aanbeveel dat die algemeen aanvaarde
rekeningkundige beginsels dit 'n vereiste maak dat die vervanging en uitbreiding van
vaste bates apart openbaar word. Verder word aanbeveel dat waardevermindering as 'n
investeringsaktiwiteit of vervanging van vaste bates as 'n bedryfsaktiwiteit in die
kontantvloeistaat openbaar word.
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'n Ondersoek na die verband tussen die eerste vier subtotale van 'n kontantvloeistaatBredenkamp, Hendrik Johannes 12 1900 (has links)
Thesis (MBA)--Stellenbosch University, 1993. / ENGLISH ABSTRACT: Cash flow information is important in evaluating the
financial results of companies. As cash flow statements
were only prepared since October 1988 as part of Generally
Accepted Accounting Practice various assumptions were
made in calculating cash flow information for earlier
years.
In a study by Wessels (1991) a few approximate methods
were used to calculate cash flow from operating activities.
For this study an analysis was again made of the
same companies.
In this latest study it is concluded that the assumptions
of the previous study could be wrong. It is therefore
suggested that the assumptions and results of the
previous study be re-evaluated. / AFRIKAANSE OPSOMMING: Kontantvloei-inligting is belangrik by die evaluering van
maatskappyresultate en daarom word aannames dikwels gebruik
om die inligting voor Oktober 1988 te bereken .
Die rede hiervoor is dat kontantvloeistate as deel van
Algemeen Aanvaarde Rekeningkundige Praktyk eers sedert
Oktober 1988 gepubliseer is .
In In studie van Wessels (1991) is gebruik gemaak van 'n
aantal benaderde metodes om kontant uit bedryfsaktiwiteite
te bereken. 'n Ondersoek na dieselfde maatskappye
wat toe gebruik is, is weer in hierdie studie gedoen.
Die gevolgtrekking wat in hierdie studie gemaak word, is
dat die aannames van Wessels moontlik foutief kon wees. Daar word aanbeveel dat die studie van Wessels en die
gevolgtrekkings waartoe gekom is, herevalueer moet word.
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Distress risk and value premium: evidence from JapanXu, Jin, 徐瑾 January 2008 (has links)
published_or_final_version / Economics and Finance / Doctoral / Doctor of Philosophy
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