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The fundamental relationship between accounting variables and firm valuation is a recurring theme in capital market research. This paper investigates this relationship within a balance sheet context and highlights the importance of controlling for relevant economic factors. We do this by conditioning explanatory power on the firm's relative financial leverage position, after controlling for cashflows and firm size, and using an arctan regression model to take account of temporary components in cash and earnings flows. Using data for 743 firm‐years for Australian Stock Exchange listed stocks, we find that for firms which are ‘above optimal leverage’: (i) earnings contain a greater level of transitory items, particularly when firm size is small; and (ii) cashflows provide higher incremental information. Our results are consistent with investors perceiving earnings as progressively less informative as the probability of failure increases, and the likelihood of earnings manipulation for the purpose of reducing proximity to debt covenants increases.

Uses Monte Carlo simulation to demonstrate the benefits of employing a currency swap to hedge the exchange rate exposure in a single international real estate investment. The only cashflow exposed to the currency fluctuations is the appreciation associated with the investment. Shows that this hedging technique has some potential for protecting the investor from adverse currency fluctuations if an international real estate investment is made. However, promises to explore unresolved issues in future research. Demonstrates that some elements of exchange rate risk may be hedged, resulting in improved risk‐adjusted returns. Thus extends earlier research in international property investment and suggests that international real estate strategies based on diversification (as opposed to currency plays) may be more effective than has been argued in previous research.

Given the range of tools and techniques available for appraising capital projects, financial managers are confronted with the problem of selecting appropriate techniques that adequately reflect their goals. This article explores the rationale underlying alternative measures of project profitability in order to discuss the relationship between various appraisal methods and the goals of management. Appraisal methods are introduced by way of numerical illustrations and diagrams which are summarised together with their underlying rationale into a single chart in order to facilitate easy reference.

In view of the significant changes in the capital structure of China’s real estate industry and enterprises in recent years, this chapter employs financial indicators and the linear regression function to analyze the relationship between corporate debt ratio and the performance of 111 A-share listed real estate enterprises in China. This study finds that the corporate debt ratio of China’s real estate enterprises in the past decade has a significant negative impact on enterprises’ performance. The study also finds that among China’s real estate companies, the corporate debt ratio has a more significant negative impact on the performance of non-state-owned enterprises than state-owned enterprises. In addition, a high debt ratio has a more significant negative impact on return on equity (ROE) than on return on assets (ROA). However, when Tobin’s Q serves as a proxy for firm performance, the negative impact of the corporate debt ratio becomes insignificant in the presence of the firm size factor. The research results of this chapter can provide some reference for subsequent policy-making and investment decisions in the Chinese real estate market.

Monte Carlo simulation is one of a number of analytical techniques available to enable managers to assess the risks surrounding capital budgeting decisions. Although it is covered in most texts on financial management, surveys have for many years pointed to only limited use of the technique by practising managers making decisions about investment projects. Describes and analyses a simulation model utilizing facilities available to most managers. The model uses a macro to automate the simulation process and generate a frequency distribution of a project′s net present value. The model can be rapidly implemented, uses a large number of individual simulations to provide a reliable frequency distribution and aids managerial decision making by presenting managers with an easily understood perspective on the uncertainty surrounding an investment project.

The investment strategies which pension funds need to put into place are complex and, in recent years, have been changing rapidly. The author looks at how change is affecting the landscape and at what risk strategies need to be put into place as well.

This paper aims to examine the impact and the link between some key strategic choices and financial performance of energy companies. In fact, in the light of the European energy directives and the related ransformations, it is interesting to analyze how much the financial performance of electricity and gas companies affects some choices related to some main characteristics of companies, and thus their active role.

This study uses data collected from Amadeus, a database from Bureau Van Dyck, to create a sample consisting of an unbalanced panel of annual period series from 2009 to 2017. The sample includes all the electricity and gas limited retailer companies registred in two countries, Italy and the UK. The used method and post-estimations include probit models and as post-estimation marginal effects and matrices of correlation.

Results identify asset turnover (sales revenue/total assets), efficiency of invested capital, as the key drivers of the strategic decisions analyzed (that is being part of a group of companies, the business chosen, the type of country and if they are companies operating in more than one phase). Age, size and headquarter of company are also significant when they are included in a larger model as control variables.

The combination of the analysis of two of the largest European electricity and gas retail markets and inclusion of financial values as performance measures are key contributions of this paper.

The purpose of this paper is to examine the relationship between Managerial Competence Functional Background of Top Management Teams (FBTMT), Management Control Systems (MCS), Contextual Factors of Planning System (CFPSY) and Cashflow Management Behaviour (CFMB) in the tourism sector in Uganda.

This is a correlational and cross-sectional study utilising a sample of 211 tourism firms (tour operator firms and hotels) and using a questionnaire to enlist responses. Data are analysed using SPSS software.

Results show significant relationships between managerial competence, functional background of top management teams, management control systems, contextual factors of planning system and cashflow management behaviour. Among the independent variables, management control systems is the best predictor of cash flow management behaviour in tourism firms. It is also a significant mediator in the link between management competence and cash flow management behaviour and that between the functional background of top management teams and cashflow management behaviour.

Appropriate cashflow management behaviour of actors in operating, investing and financing activities of tourism firms can be improved through highly developed management competence, strong management control systems, utilisation of varied functional background of top management teams and enabling contextual factors of the planning system. The study operationally defined cash flow management behaviour as any management behaviour that is relevant to cash flow management in a firm's operating, investing and financing activities probably for the first time and this speaks to those financial statement analysts and other stakeholders wishing to infer cash flow management behaviours from the statement of cash flows.

As far as we are aware, no research has been done on the relationship between the cash flow management behaviour of tour operator companies and hotels in Uganda's tourism sector and the internal contingencies of managerial competence, functional background of top management teams, management control systems, and contextual factors of the planning system.

The purpose of this paper is to present a new scheme of public–private partnership (PPP) within the framework of motorways of the sea (MoS) similar to that of an equity joint venture along with a methodology for valuing risk transfers arising from options embedded in the clauses included in such agreement.

The architecture of the proposed PPP is an adaptation to the scope of a MoS of collaborative schemes commonly used in industry such as equity joint ventures. The methodology for valuing options involved making use of a valuation tree of optimal cashflows along with algorithm designs from the field of financial and real options.

The proposed structure of public–private equity joint venture (PPEJV) increases the stability of private–public collaboration as compared with standard PPPs, so as to achieve the desired modal shift. The analyzed case study shows how the methodology provides valuable numerical information for both negotiating partners and policy makers.

This study provides a quantitative tool for policy makers to redefine the role that public agents and public funds should play in a future sustainable mobility model.

The originality of the authors’ contribution to the field of PPPs in transport is triple. First, there is no precedent in the literature on PPPs of an architecture similar to that of the proposed PPEJV. Second, unlike the usual practice in the valuation of financial or real options, no prior structure is assumed for modelling the behaviour of cashflows. Third, the type of options addressed is not usual neither in the real options literature in general nor in the valuation of guarantee mechanisms included in PPPs in particular.

There are two ways in which the risk of a capital project can be described. This article outlines these two approaches: Sensitivity Analysis and Probability Analysis, and emphasises the connection between the two methods. The output of a computer model of the sensitivity of the project to underlying factors is used as input for a probability analysis. The methods are illustrated with a case study, the MM Co Ltd.