Analyzing the relationship between cash flow and cash cycle and their impact on the value of the firm
An applied study on a sample of industrial companies listed
on the Iraq Stock Exchange
A study submitted to the Board of the College of Business and Economics/ University of Karbala, which is part of the requirements for obtaining a master’s degree in Business Administration Sciences
By
Ali Jasim Mohamed Ali Al-Ali
Supervisor by
Assist. Prof. Dr. Ali Ahmad Faris
Abstract
The study aims to clarify the relationship between cash flow and the cash cycle and analyze it as two independent variables, and to study the effect of this relationship on the value of the firm as a dependent variable, as well as to emphasize the role and importance of these cash flows within the financial reports, in order to give more attention to them by companies whose problem arises In weak interest in the cash flow statement. In addition to addressing the clarification of the importance of the cash cycle, its components, the importance and role of each component in it, and the endeavor to develop solutions and address the reasons for the increase in the number of days of the cash cycle for the sample companies.
In order to reach the aim of the study, a sample was chosen from a group of industrial companies listed on the Iraq Stock Exchange, which amounted to (6) companies out of (14) companies, and the reason for choosing these companies is their continued circulation in the stock market throughout The duration of the study is between 2005 – 2019.
Cash flows were measured through three indicators represented by net operating cash flow, net investment cash flow and net total cash flow, while the cash cycle was measured by its components, which is the inventory transfer period, accounts receivable collection period, accounts payable period, and the value of The establishment using Altman’s equation by making an amendment in it, as the value of the facility was extracted in terms of the typical Z value of (2.675), and the hypotheses of the study were tested by analyzing the companies’ data, the study sample with the help of SPSS V.25 program, which included the multiple linear regression analysis model, and used the coefficient of the study. Simple Correlation (Pearson).
The study produced various conclusions, the most important of which was the absence of a significant effect in analyzing the relationship between cash flows and the cash cycle on the value of the firm, for most of the companies in the study sample, and through the conclusions, the study called for a set of recommendations, the most important of which is, giving the cash flows of companies the study sample more attention, As well as working to achieve a kind of balance between the components of the cash cycle.
Key words: cash flows, cash cycle, value of the firm.
