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On Operating Cash Flow Investment Analysis

Posted on:2004-11-18Degree:MasterType:Thesis
Country:ChinaCandidate:Z Q LiuFull Text:PDF
GTID:2206360122471950Subject:Industrial economy
Abstract/Summary:PDF Full Text Request
From the year of 1997 to 2001,there are series of accounting-fraud events taken place in China and over the world. These events heavily beat the interests of the investor, Some of analysts began to explore new methods to analyze the financial report, in order to get the true understanding of the financial data. For the same aim this article focus on the operating cash flow (OCF) of enterprises, trying to find the regularity of the OCF, and presenting more accurate analyzing methods to the users of the financial report. The article includes 9 chapters.The article explains the concept of "Product Cycle". "Product Cycle" comprises two meaning of "Life Cycle of product" and "Producing Cycle of product". Product cycle influence the operating cash flow of the enterprises. It takes some companies for the examples from China public corporation, demonstrating that OCF is relative to the product cycle, not the accounting periods of the enterprises. We should use the average of 2-4 years of the OCF. So we should analyze the OCF of the enterprises in the term of its product cycle.Based on the average of 2-4 years of OCF, the article presents the concept of "Surplus Cash Flow(SCF)" and its formula:SCF=net OCF - capital cash flow out - net i nvest cash flowSCF is the cash that can be used freely by the owners, for example: dividend. And whatever it is used for, it would not bring impact to the normal operating of the enterprises. We must consider the capital disbursement in the future, and make the accurate forecast for it.In the chapter 8 the article introduces some usual methods of analyzing OCF. In the last chapter, it explains the significance of SCF:1) it is a useful implement to the investor. 2) It indicates the ability of payment of the enterprises. 3) The decision maker may do the correct plan, and promote the management level of the enterprises.
Keywords/Search Tags:accounting, cashflow, financial analysis
PDF Full Text Request
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