A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY

COMPANY LIMITED.

CHAPTER - 3
Literature review
The previous chapter has discussed the enquiry of the study,
highlighted the overviews background of the company. This
chapter looks at the concept of cash flow statement as given by
other authors and researchers with importance to
accountability, profit measurement, solvency, ambiguity, and
disclosure and their specific relevance for proper financial
management of commercial company .one of the aim and
objectives of this dissertation was to review conceptual though
and theoretical framework related to cash flow analysis.
Developing a critical review of cash flow literature and any
related issues help the researcher, manager and any potential
reader to better understand the subject and also provide a
framework for data analysis. Governance as stated in the UK
charity commission standard for good governance code is “the
systems and processes concerned with ensuring the overall
direction, effectiveness, supervision and accountability of an
organization.”

This chapter begins with a clarified concept of cash flow as

stated by the Financial Accounting Standard Board (FASB) and
also develop and update and utility of cash flow when
REVA UNIVERSITY Page 1
 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

managing commercial activities. How the better knowledge on

that topic helps in business decision making nowadays.
Hathway Cable & Datacom Limited (Hathway) is one of the
India’s leading Cable Broadband service providers. It also
provides Cable Television services through its wholly owned
subsidiary – Hathway Digital Private Limited, which is one of the
largest Multisystem operators in India. Hathway vision is to be a
single point access provider, bringing into the home and work
place a converged world of information, entertainment and
services

Broadband: Hathway holds a PAN India ISP license and was the
first cable television services provider to offer High-speed cable
broadband services across 16 cities (4 metros and 3 mini
metros), having more than approx. 5.5 mn Home passed and
0.77 mn Subscribers as on Q1FY19.

Cable Television: One of India’s largest MSO, across various

regions of the country and transmitting the same to LCOs or
directly to subscriber’s Extensive network connecting 7.2 Mn

REVA UNIVERSITY Page 2

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

digital cable subscribers / households Offers cable television

services across 350 cities and major towns.

Hathway has been awarded the best MSO by the Indian Telly
Awards for its quality Cable TV and Broadband Internet Services
nine times and "Star News Brand Excellence Awards for Brand
Excellence in Digital Products for Internet Services in 2011".
Hathway has been voted as one of the best managed media
companies in Asia 2013 based on a study conducted by
EUROMONEY.
The format of a review of literature may vary from discipline to
discipline and
from assignment to assignment.
A review may be a self-contained unit an end in itself or a
preface to and
rationale for engaging in primary research. A review is a
required part of grant and
Research proposals and often a chapter in thesis and
dissertations.
1 Generally, the purpose of a review is to analyze critically a
segment of a

REVA UNIVERSITY Page 3

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

Published body of knowledge through summary, classification,

and comparison of
prior research studies, reviews of literature, and theoretical
articles.
The main objective to achieve in the literature review is
developing
knowledge and understanding of the previous work or activity
in regard to the topic
being researched. The literature review also addresses the
importance and need to
inform the investigator as to the main findings, trends, area of
debate or controversy,
area of neglect and suggestions research.

2 There are hundred books and papers about cash flow and
accrual accounting
but there are few books and papers about both the topic
together. In this chapter,
researcher has tried to collect data from research papers,
theses and books related to

REVA UNIVERSITY Page 4

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

this study. The goal of this chapter is to collect the literature

review by considering
the key theoretical issues related to the research proposal. That
means using accrual
accounting and cash flow data in predicting future cash flow
and to present models of
cash flow prediction.
This chapter constitutes of two parts viz. review of literature
and research gap.
The first part is related to review of literature and second part
is based on the critical

Title of a study
Study on impact on cash flow statement

Objective of the study

(i) To depict inflows and outflows of cash, that is, sources and
uses of cash from different activities.

REVA UNIVERSITY Page 5

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

(ii) To reveal good and bad points relating to the management

of cash.

(iii) To facilitate formulation of financial policies such as

dividend policy etc.

(iv) To ascertain the liquidity of the enterprise.

(v) To enable a more realistic assessment of the financial

condition of the enterprise and to anticipate the cash position.

Limitations of the problem

i. Non-cash Transactions are ignored: The Cash Flow Statement
shows only inflows and outflows of cash. It does not show non-
cash transactions like the purchase of buildings by the issue of
shares or debentures to the vendors or issue of bonus shares.

ii. Not a substitute for an Income Statement: An income

statement shows both cash and non-cash items. The income
statement shows the net income of the firm whereas the Cash

REVA UNIVERSITY Page 6

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

Flow Statement shows only the net cash inflows or outflows

which do not represent the net profits or losses of the
enterprise.

iii. Historical in Nature: It rearranges the existing information

available in the income statement and the balance sheet. It will
become more useful if it is accompanied by the projected Cash
Flow Statement.

iv. Ignorance: It ignores basic accounting concept, i.e., accrual

concept.

v. What is Cash: It is difficult to precisely define the term

‘cash’. There are controversies over a number of items like
cheques, stamps, postal orders, etc. to be included in cash.

vii. Does not reveal true liquidity position: A Cash flow

statement reveals the inflow and outflow of cash but the
exclusion of near cash items from cash obscures the true
reporting of the firm’s liquidity position.

REVA UNIVERSITY Page 7

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

vii. Working Capital ignored: Working Capital being a wider

concept of funds, a funds flow statement presents a more
complete picture than cash flow statement.

Purpose of the study

The primary purpose of the statement of cash flows is to
provide information about cash receipts, cash payments, and
the net change in cash resulting from the operating, investing,
and financing activities of a company during the period.

Hypothesis
Particularly, the current study will investigate the relationship
between components of the cash flow statement and security
returns. ... The first hypothesis tests the ability of an increase (a
decrease) in historical cash flows received during a year to alter
market expectation of the future cash flows of firms.

Research design
Multiple regression models were used to analyze the data and
the findings of the study indicate that Cash flow from the
financing and the investing activities have a great positive
REVA UNIVERSITY Page 8
 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

influence on the banks' profit while operating cash flow has a

negative effect.

The different types of research design

1. To analyse liquidity position
2. To study profitability of selected units
3. To analysis the receivable management
4. To examine the cash position
5. To analysis cash flow statement
6. To make suggestions for improvement of financial soundness

This types of research design

A Descriptive Design
B Correlation Design

C Quasi-Experimental Design

DATA COLLECTION

REVA UNIVERSITY Page 9

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

A key to remember is that a change in the long-term assets in

the balance sheet is reported in the investing activities of the
cash flow statement. ... These investments are a cash outflow,
and therefore will have a negative impact when we calculate
the net increase in cash from all activities.

Data collected in ways

1 primary data
2 Secondary data

Primary data
A Cash Flow Statement (also called the Statement of Cash
Flows) shows how much cash is generated and used during a
given time period. It is one of the main financial statements. ...
One of the primary reasons cash inflows and outflows are
observed is to compare the cash from operations to net
income.
Secondary data
Secondary data involves figures denoted regarding cash inflow
and cash outflow in cash flow statement reported in annual

REVA UNIVERSITY Page 10

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

report of the business firm for three years i.e. 2011-12, 2012-13
& 2013- 14.

Scope and limitations of study

Limitations of study
1. Since cash flow statement does not consider non-cash items,
it cannot reveal the actual net income of the business.
2. Cash flow statement cannot replace fund flow statement or
income statement. Each of them has a separate function to
perform which cannot be done by the cash flow statement.
3. The cash balance as disclosed by the projected cash flow
statement may not represent the real liquid position of the
business since it can be easily influenced by the managerial
decisions, by making certain payments in advance or by post
ponding payments.
4. It cannot be used for the purpose of comparison over a
period of time. A company is not better off in the current year
than the previous year because its cash flow has increased.

REVA UNIVERSITY Page 11

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

5. It is not helpful in measuring the economic efficiency in

certain cases e.g., public utility service where generally heavy
capital expenditure is involved.
In spite of these limitations, it can be said that cash flow
statement is a useful supplementary instrument. It helps
management in knowing the amount of capital blocked up in a
particular segment of the business. The technique of cash flow
analysis—when used in conjunction with ratio analysis—serves
as a barometer in measuring the profitability and financial
position of the business.

Scope of study
1. The research would highlight the comparative position of a
sample
commercial bank with respect to ICICI Bank - the first Indian
Universal Bank, which would help the concerned banks to know
where it stands with respect to Universal Bank.
2. The research would enumerate the financial health and risk
exposure

REVA UNIVERSITY Page 12

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

of sample commercial banks in terms of the CAMEL Model. This

would be helpful to understand the relative strength and risk
exposure
of Indian commercial banks.
3. The research would also point out the perception of Bank
Managers
on Universal banking concept and at the same time would also
bring
to light the perception of customers of banks regarding the
awareness
and demand of various services presently offered by the banks.
4. The research can be used as a base for Post-doctoral
research work.

Chapter schemes

1 CHAPTER - INTRODUCTION
INTRODUCTION. Simply, cash flow statement indicates the
amount of cash receipts and the amount of cash payments or
disbursements during a specified time. It outlines from where

REVA UNIVERSITY Page 13

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

cash was generated and to where it was expensed. In other

words, it reports the cash inflows and cash outflows, during a
time period.

2 CHAPTER - COMPANY AND INDUSTRIAL PROFILE

Hathway Cable and Datacom Limited is a holding company. The
Company is a multi-system operator providing cable television network
services, Internet services and allied services.

3 CHAPTER - RESEARCH METHODOLOGY

This chapter looks at the concept of cash flow statement as
given by other authors and researchers with importance to
accountability, profit measurement, solvency, ambiguity, and
disclosure and their specific relevance for proper financial
management of commercial company
4 CHAPTER - DATA ANALYSIS AND INTERPRETATION
An analysis of cash flow statements can reveal many things like
the quality of earnings through comparison of cash from
operating activities to company's net income. It decides the
strength of a company and provides data whether a company
has enough cash to pay its expenses or not.

REVA UNIVERSITY Page 14

 A STUDY ON THE IMPACT OF CASH FLOW STATEMENT AT HATHWAY
COMPANY LIMITED.

5 CHAPTER - FINDING CONCLUSION AND SUGGESTIONS

Investment Analysis Summary. The cash inflows and cash
outflows in the cash flow statement are segmented into cash
flow from operations, investing, and financing. These details
provide insight in the liquidity and solvency, as well the entities
ability to meet future needs for capital and growth.
BIBLIOGRAPHY
ANNEXURE

REVA UNIVERSITY Page 15