Comparison of EPS, HEPS and operating cash flow per share for South African listed industrials

Timol, Yusuf Ismail (2001-12)

Thesis (MBA)--Stellenbosch University, 2001

Thesis

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.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/52169
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