CASH-FLOW SENSITIVITY TO PAYMENTS FOR MATERIAL RESSOURCES

Lavinia Elena BRÎNDESCU Olariu
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Lavinia Elena BRÎNDESCU Olariu: BRD – Groupe Societe Generale

Management Intercultural, 2014, issue 32, 21-28

Abstract: The financing decision is taken based on the expectations concerning the future cash-flows generated in the operating activity, which should provide coverage for the debt service and allow for an increase of the shareholders’ wealth. Still, the future cash-flows are affected by risk, which makes the sensitivity analysis a very important part of the decision process. The current research sets to evaluate the sensitivity of the payment capacity to variations of the payments for raw materials and consumables. The study employs 391 forecasted yearly cash-flow statements collected from 50 companies together with detailed information concerning the hypotheses of the forecasts. The results of the study allow for the establishment of benchmarks for the payment capacity’s sensitivity, the determination of the mechanisms through which the variation of payments for raw materials and consumables impacts the payment capacity, as well as the identification of the possible causes of such a variation.

Keywords: Forecasting; Investment; Sensitivity; Risk; Cash-flow; Financial analysis (search for similar items in EconPapers)
JEL-codes: G32 G33 M21 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:cmj:interc:y:2014:i:32:p:21-28

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