A Financial Profile Of Cash Generating Firms

Abstract

The study clearly establishes a financial profile for firms that generate more cash than is necessary for dividends and capital replacement.  This profile has implications for corporate managers, portfolio managers, and investors.  Data were gathered from 120 firms and statistically analyzed.  The cash generating firms were found to have higher systematic risk, and return to total capital, but lower unsystematic risk, price-earnings multiples, financial leverage, and dividend payout than firms in general.