现金流对营运资本管理的影响和资金投资【外文翻译】复习进程

外文翻译

原文

The Cash Flow Implications of Managing Working Capital and Capital Investment Material Source: Journal of Business & Economic Studies

Author: Russell P. Boisjoly

INTRODUCTION

In recent years major corporations have discovered that there are important cash flow streams available to them if they aggressively manage their working capital accounts (accounts receivable, inventory, accounts payable, and advance payments).While some have argued that cash flows generated through working capital management (improving inventory turnover, aggressive accounts receivable collection policies or supplier management programs, lengthening accounts payable payment periods, etc.) are transitory and, therefore, are not indicative of a fundamental improvement in the internal value creation process (business model), there is limited empirical evidence on whether these practices (a) have changed the underlying probability distributions of the related financial ratios, (b) persisted over several years rather than just 2 or 3 years as implied by Mulford and Ely who purport that changes are transitory or temporary, (c) whether these changes in working capital management policies have impacted market values positively (or negatively) or (d) whether we understand the model for cash flows through the firm adequately to properly conduct empirical tests or forecast cash flows. In addition to managerial policies, one should probably consider changes in technology and changes in the financial environment. Typical DSO or ACP ratios have been radically lowered for most merchandisers by the nearly universal outsourcing of the credit function to credit card companies. Also, the decline of short-term interest rates most certainly affected WC policies during the period in question, making firms less willing to hold cash, and perhaps more willing to increase short-term liabilities.

This issue is important to examine not only to determine if changes in management practices have impacted cash flow and value creation, but also to investigate whether ratio norms may have changed and shifted the benchmarks for comparisons between firms. Furthermore, these benchmarks are derived from the

measures of central tendency, but the appropriate use of these benchmarks may be influenced (or biased) by the third (skewness) and fourth (kurtosis) moments of the ratio distributions or industry effects or financial condition. If the bias exists and if the skewness is significant, then the appropriate benchmarks may deviate significantly from the mean, median, or mode. In the past, some researchers excluded “outliers,” e.g., introduced by skewness, from their studies because they were responsible for departures from normality, or they made square root or logarithmic transformations to the data to reestablish or more nearly approach normality. These adjustments theoretically would leave the “benchmarks” unaltered. But, there is substantial evidence the distributions of financial ratios exhibit positive skewness.

Previous studies show that distributions of financial ratios exhibit positive skewness and departures from normality. However there have been no attempts to explain the source of the skewness. If management has engaged in practices that should attenuate mean deviations, skewness, or kurtosis, then there may be evidence of this that can be discovered by following firms over time. If distributions have shifted (mean, variance, skewness, and/or kurtosis), then a longitudinal investigation may lead to the establishment of new benchmarks or a new benchmark measurement process, as well as examine the impact on stock price performance.Also, if evidence exists for ratio distribution shifts, then there is cause to reexamine the value creation process and the causality of cash flow generation to value creation. Therefore,the starting point is this longitudinal study of an original sample of 50 firms to determine if distributions have shifted due to changes in working capital management and corporate reinvestment policies.

HYPOTHESIS FORMULATION

This study will look at the distributional properties of several financial ratios tied to the working capital management and capital investment processes of the firm. We will investigate whether there is evidence to support the acceptance of the hypotheses that corporations, especially the largest firms, have become more vigorous in managing their working capital processes or capital investment practices to generate significant improvements in cash flow. Specifically, corporations may have improved the management of accounts receivable, inventory, accounts payable, and advance payments to such an extent that distributions of the related financial ratios have shifted significantly. The distributions also may be more skewed as a result of these changes in corporate policy to accelerate customer payments or