Gearing and cash flows for manufacturing firms
Description
Poor company gearing, financial leverage, and free cash flows are the main reasons why investors lose faith in emerging economy stock markets. This is especially true during recessions brought on by growing debt, inflation, and the high cost of doing business. In Ghana, an emerging nation now characterized by economic downturns, our study examines the effect of business gearing on the cash flows of listed enterprises. We analyze data from all manufacturing companies registered on the Ghana Stock Exchange between 2011 and 2022 using panel regression models. Regardless of Ghana's economic difficulties, the study demonstrates that debt-to-asset and debt-to-equity ratios greatly enhance cash flow performance. The debt-to-capital ratio has no discernible impact on cash flow performance, despite what many people think. Investors and prospective investors can learn more about the cash flow management of Ghanaian listed manufacturing companies from this study. It will direct regulatory agencies and management in the development of gearing and liquidity policies. The management of publicly traded manufacturing companies is urged to raise the company's asset value, examine and implement sound debt management and cash flow practices, including goal-setting and performance evaluations, and raise shareholder ownership proportionately to boost leverage levels. Future studies should examine the effects of time interest earned ratios and macroeconomic factors on the cash flows of businesses in different emerging economies.
Files
Steps to reproduce
Annual reports of the manufacturing firms were downloaded from the websites of the companies. Relevant figures were hand picked and entered into Excel