Finance, Markets and Valuation
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Title: Analysis of the relationship between the return of assets and the cash cicle of the companies dedicated to the road transport of goods
Authors: David Postiguillo, María Pilar Muñoz
DOI: Not found
Abstract:
The economic literature argues that in the absence of market imperfections the financial decisions of the companies would not affect their value. In this situation, external financing is always available. However, the existence of imperfections opens the possibility to the existence of an optimal level that balances costs and benefits and maximizes the value of the companies. The financial decisions of the company cover two basic aspects: investment and financing. Both are aimed at creating value. Given that the investment made by companies in their current assets, as well as their financing, represent the majority of the items in their balance sheets. Its management has effects on profitability and risk and this is fundamental to the strategy of creating value in the company. In fact, inadequate management can cause solvency problems, even in profitable companies. The net investment needed as a result of the company’s activity (current operating assets less supplier’s financing) is known as operating fund requirements (OFR). It is a concept of great importance for its impact on the liquidity and profitability of the company. However, there are still a number of issues that have not been addressed by researchers and which are of interest in the short-term financial management of firms. In this way, the different alternatives for financing the OFR, the relationship between OFR and Goodwill, and other accounting figures will be analyzed to determine their impact on the company’s value and company’s profitability.
Keywords: Not found
