International Journal of Economics and Business Administration
Articles Information
International Journal of Economics and Business Administration, Vol.1, No.2, Sep. 2015, Pub. Date: Aug. 3, 2015
Going Concern Assessment Through Cash Generating Power: Evidence from Cash Flow Statements (A Case Study of Nigerian Breweries PLC)
Pages: 113-119 Views: 1374 Downloads: 536
Authors
[01] Alayemi Sunday Adebayo, Faculty of Business and Social Sciences, Department of Accounting, Adeleke University, Ede, Osun State, Nigeria.
[02] Owolabi Sunday Ajao, Department of Accounting, Babcock Business School, Babcock University, Ilishan-Remo, Ogun State, Nigeria.
[03] Sokefun Adeyinka Olawanle, College of Management Sciences, Department of Financial Studies, Redeemer’s University Ede, Osun State, Nigeria.
Abstract
Purpose The purpose of the study is to assess going concern of an entity through cash generating power as evident from cash flow statement in Brewery industry in Nigeria with special reference to Nigerian Breweries Plc. The reason for the choice of the sample is that it is the pioneer and largest brewing company in Nigeria. As at 31st December, 2012, it had a market capitalization of N1.1 trillion, making it the second largest company in Nigeria. Data for this study were generated from secondary sources (annual report and account of Nigerian Breweries Plc.). A quantitative approach is adopted which makes the research a scientific study which seeks to solve practical problems and its aim is to develop practical knowledge in investigating power of cash flow of Nigerian Breweries Plc. It can be considered as an applied research. The result of this research can be applied to solve the problem that exists on how to manage cash flow in an organization to maintain going concern of an organization. There is negative effect of current liability coverage on cash generating power which is not significant. This means that as the cash generating power increases there will be increase in the number of times current liability coverage are covered. There is direct relationship between cash generating power and long term debt coverage which is significant. This means that long term debt coverage directly related to cash generating power of the company. There is negative relationship between cash generating power and interest coverage which is significant. The implication is that interest coverage has inverse relationship with cash generating power of the company. If the assets are utilized judiciously as indicated by the earnings quality, the better for the company, this eventually will culminate into sound cash generating power for the company. Earning quality provides a more realistic indication of the extent of deviation between operating cash flow and reported earnings. Information from cash flow from investing and financing activities is very important, however, the principal motive for the existence of the organization is its operating activity.
Keywords
Going Concern, Cash Generating Power, Operating Activity, Cash Flow Statement, Long Term Debt
References
[01] Andrew, W.P. & Schmidgall, R.S. (1993). Financial management for the hospitality industry.
[02] Azar, A. & Momeni, M. (2006). Statistics and its application in management. Samt Publication, 8th edition.
[03] Lasing, MI: Educational Institute of the American Hotel & Lodging Association.
[04] Beck, D.F. (1994). Cash is king. Health Care Supervisor, 13 (1), 1-9.
[05] Bohannon, j., & Edwards, D. (1993). Cash budgeting. Journal of property Management, 58(3), 52-53.
[06] Casey, C., & Bartczak, N. (1985). Using operating cash-flow data to predict financial distress: some extensions. Journal of Accounting Research, 23 (1), 384-401.
[07] Coltman, M. M., & Jagels, M. G. (2001). Hospitality management accounting, 7th ed. New York: wiley.
[08] Davidson, S., Stickney, C. P., & Weil, R. L. (1988). Financial accounting, 5th ed. Chicago; Ryden Press.
[09] DeFranco, A. L. & Schmidgall, R. S. (1998). Cash flow practices and procedures in the lodging industry. Journal of Hospitality & tourism Research, 22 (1), 72-83.
[10] Epstein, M.C., & Pava, M.L. (1994). Profile of an annual report. Financial Executive, 10 (1), 41-43
[11] Geller, N., Ilvento, C.L.,& Schmidgall, R. S. (1990). Update your accounting with cash flow statements.Lodging, 15 (10), 54-56.
[12] Giacomino, D. E., & Mielke, D. E.(1993). Cash flows: Another approach to ratio analysis. Journal of Accountancy, 175 (3), 55-58.
[13] Harris, P.J., & Brown, J.B. (1998). Research and development in hospitality accounting and financial management. Hospitality Management, 17, 161-181.
[14] Jagels, M. G., & Coltman, M. M. (2004). Hospitality management accounting, 8th ed. New York: Wiley.
[15] Jang, S., & Yu, L. (2002). Analysis of return on hotel investment: A comparison of commercial hotel companies and casino hotel companies. Journal of Hospitality & Tourism Research, 26 (1), 38-52
[16] Kisang, R. & Shawn, J. (2004). Performance measurement through cash flow ratio and traditional ratio: A comparison of commercial and casino hotel companies. The Journal of Hospitality Financial Management. Vol. 12, No. 1, 15-25.
[17] McGowne, L. R. (1989). FASB 95: Cash flow statements in the hospitality industry Bottomline, 3 (6), 20-25.
[18] Mergent Online (2003). Retrieved Sep 4, 2003, online from the World Wide Web: http://www.Westga.Edu/%7Editance/ojdla/fall53./rivera53.html.
[19] Mills, J.R., & Yamamura, J.H. (1998). The power of cash flow ratios. Journal of Accountancy, 186 (4), 53-62.
[20] Norman, E. D., & Mayer, K.J. (1997). Yield management in Las Vegas casino hotels. Cornell Hotel and Restaurant Administration Quarterly, 38 (5), 28-33.
[21] Schimidgall, R.S., Geller, A. N., & Ilvento, C. (1993). Financial analysis using the statement of cash flows. Cornell Hotel and Restaurant Administration Quarterly, 34 (1), 46-53.
[22] Sylvester, J., & Urbancic, F. R. (1994). Effective methods for cash flow analysis. Healthcare Financial Management, 48 (7), 62-72.
[23] Tharshiga, M. (2013). Effect of debt on corporate profitability. (Listed hotel companies Sri Lanka. European Journal of Business and Management, Vol. 5, No. 3, 13-18.
[24] Velnampy, T. (2005). A study on investment appraisal and profitability. Journal of Business Studies. 2. 23-35.
[25] Velnampy, T. (2006). An empirical study on application of Altman original bankruptcy forecasting model in Srilanka companies. Journal of Management. Sai Ram Institute of Management. Sai Ram Engineering College. India.
[26] Velnampy, T. (2012). Relationship between capital structure and profitability of ten listed Sri Lankan. Global Journal of Mnagement and Business Research. Vol.12, issue 13.
[27] Zeller, T. L., & Stanko, B. B. (1994). Operating cash flow ratios measure a retail firm’s ability to pay. Journal of Applied Business Research, 10 (4), 51-59.
600 ATLANTIC AVE, BOSTON,
MA 02210, USA
+001-6179630233
AIS is an academia-oriented and non-commercial institute aiming at providing users with a way to quickly and easily get the academic and scientific information.
Copyright © 2014 - 2017 American Institute of Science except certain content provided by third parties.