Abstract:
Awareness of how the components of companies' internal financial flexibility are related leads to improved management performance in dealing with sudden financial problems and crises, as well as optimal use of emerging investment opportunities. Managing internal financial flexibility is directly related to how cash flow, debt capacity, and their interaction are used in the face of crises and external shocks. In this regard, the present article examines the relationship between the components of internal financial flexibility in 69 companies listed on the Tehran Stock Exchange during the period 1382 to 1391. For this purpose, extracted information was tested and analyzed using descriptive statistics methods and panel data models. Based on the obtained results, debt capacity does not affect the prediction of the amount of cash resources held; however, the amount of cash resources held can be considered one of the effective factors in determining the debt capacity of companies.
Machine summary:
In this regard, the present article examines the reciprocal relationship between the components of internal financial flexibility of companies listed on the Tehran Stock Exchange, and with the help of its two main components (debt capacity and company cash resources), it examines how to measure the internal financial flexibility of companies.
Their research results showed that cash is positively affected by investment opportunities and cash flows and negatively affected by the liquidity of assets, financial leverage, and company size.
Their research results showed that cash is positively affected by investment opportunities and cash flows and negatively affected by the liquidity of assets, financial leverage, and company size.
Model 3) 3i,t + α4Qi,t +α3Ln)AT(i,t +α2INDSTDCFi,t +C+α1CFi,t =DCP This model does not consider cash resources as an effective factor in predicting and determining the amount of debt capacity of the company.
Therefore, to investigate whether the amount of cash holdings is effective in predicting the amount of debt capacity of companies, the cash variable (as another independent variable) is added to Model 3.
In Model 1, debt capacity has not been considered as an effective factor in predicting and determining the cash held.
According to the results of the hypothesis test, it can be said that debt capacity has no effect on the level of cash holdings of companies listed on the Tehran Stock Exchange.
Also, according to the obtained results, cash can be considered as one of the effective factors in determining and predicting the debt capacity of Iranian companies.
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