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Relationship between Free Cash Flow and Financial Performance Evidence from the Listed Real Estate Companies in China
| Content Provider | Semantic Scholar |
|---|---|
| Author | Zhou Yang Shu-Ting Meng, Zhang |
| Abstract | ZHOU Hong , YANG Shuting,b and ZHANG Meng Zhejiang University City College, Huzhou Street 51, Hangzhou, China zhouh08@126.com, 156443651@qq.com, hl1114@126.com Abstract. Free cash flow is the results of business activities. Based on the data from 2006-2010 of all listed real estate companies in China, authors studied the relationship between the free cash flow and the financial performance of these firms in order to optimize the finance decision for management and investment. Using principal component analysis and regression analysis, key financial performance indicators were calculated out of 21 financial performance indicators, and these key indicators of sample companies were correlated to their free cash flow. The results showed that the free cash flow of a company is negatively linear-correlated to its financial performance, i.e., too much free cash flow will lead the financial performance to decline. Therefore, the investors and the managers should comprehensively analyse the free cash flow, and avoid business inefficient because of too much free cash flow, which triggers the investment risk and loss. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.ipcsit.com/vol36/064-ICIIM2012-M20017.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
