Browsing by Author "Steyn, B. W."

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    Cash flow reporting : do listed companies comply with AC 118
    (University of Pretoria, 2003) Steyn, B. W.; Hamman, W. D.
    This article assesses the state of cash flow reporting by listed South African industrial companies in order to evaluate whether the users of financial statements can accept them as being reliable and use them as a tool to compare the operating performance of various companies. As the cash flow statement has been in use since 1989, it was envisaged that compliance would be high. However, it was found that there are several companies that deviate from some of the requirements of AC 118 regarding cash flow statements.
  • Thumbnail Image
    Item
    The danger of high growth combined with a large non-cash working capital base - a descriptive analysis
    (AOSIS, 2002) Steyn, B. W.; Hamman, W. D.; Smit, E. v d M.
    A high growth rate may not be the ultimate measure of a successful company. This article shows that growth at too high a rate, for a company with a high non-cash working capital component, may lead to financial difficulties. While the income statement of a company is based on the accrual of income and expenses, the cash flow statement is based on the receipt and payment of cash. A company experiencing high sales growth, depending on the extent of its non-cash working capital, will find that the cash flow from operating activities before the payment of dividends will not grow as quickly as the net profit after taxation. This is because the accrual part included in the net profit after taxation is also growing at a high rate. At such a growth rate, operating activities do not generate sufficient cash to sustain the day-to-day activities of the company.
  • Thumbnail Image
    Item
    Measuring cash flow flexibility of companies : the cumulative index-difference
    (AOSIS, 2002) Steyn, B. W.; Hamman, W. D.; Smit, E. v d M.
    Cash is king. Even a highly profitable company can find itself in search of financing due to a lack of cash to honour its obligations. If this situation is only temporary and external sources of finance are freely available, this cash flow obstacle does not have to be detrimental to the stakeholders of the company. However, if the poor cash position of a company is not temporary, but rather an integral part of its structure and a result of its strategy, stakeholder interest may be at risk. Although insolvency is seldom the outcome, such companies find themselves struggling because of their cash flow inflexibility. The cumulative index-difference aims to identify companies that are cash flow inflexible, in order to enable stakeholders to take timely measures to prevent a negative outcome. With adjustments in strategy and preventative measures taken, the cash flow positions can be improved to prevent a disaster.