Research On The Relationship Between Over-investment And Operating Cash Flow

With the continuous development of Chinese market economy,the sales revenue of most companies has risen with the market economy.Sales in good condition has laid a solid foundation for the development of enterprises.At this moment of grand plans,however,as sales revenue grows,the cash flow of operating activities of some companies has been declining,and the deterioration of cash flow became increasingly serious.This paper analyzes the situation by citing the over-investment variables to explore whether sales revenue growth triggers excessive investment behavior,leading to a deterioration in cash flow.This paper uses the 2013-2017 A-share listed company's manufacturing industry as a research sample.Based on the literature integration and theoretical basic research,it theoretically analyzes the possibility of the negative correlation between sales revenue and operating cash flow,and quoting over-investment variables and cross-terms of over-investment variables and sales-income variables to explore whether this status is related to over-investment.Through the data integration and analysis,the regression analysis was performed with the multiple regression methods by using the stata software.The empirical research results show that the increase in sales revenue of listed manufacturing companies may lead to deterioration of operating activities cash flow in future.In order to explore whether this phenomenon is caused by excessive investment behavior,the over-investment enterprises selected by Richardson's residual measurement model are introduced as samples for analysis.The regression results show that the same conclusions exist in over-investment enterprises.The over-investment companies are divided into state-owned enterprises and private enterprises for regression analysis.In state-owned enterprises,the rapid growth of sales revenue will lead to excessive investment,further worsening the cash flow of the next year.However,in private enterprises,when sales revenue grows faster,the deterioration of operating cash flow in the next year has nothing to do with excessive investment by enterprises.State-owned enterprises may over-invest in sales growth,either to meet the needs of local governments,or because of the “on-the-job consumption” situation of management.It is necessary to strengthen the supervision and control of management,and when management makes investment decisions,it should be rational and temperate.In private enterprises,although the future cash flow and over-investment have not passed the significant test,private enterprises still need to pay attention to the daily cash flow control,do a good cash budget,and strengthen cash control.