Title

Estimating Cashflow-at-Risk (CFaR): A Comparables Approach for Restaurant Firms

Authors

Authors

S. Jang; K. Park;J. E. Lee

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

Cornell Hosp. Q.

Keywords

Cashflow-at-Risk (CFaR); Value-at-Risk; risk management; comparables; approach; restaurant firms; Hospitality, Leisure, Sport & Tourism; Management; Sociology

Abstract

Of the many risks faced by restaurants, a shortage of cashflow is among the most damaging. This study introduces an effective tool to estimate the cashflow risk of restaurants, so that firms can be ready to address the potential risks. Using a comparables approach to Cashflow-at-Risk (CFaR), the study analyzes cashflow data from publicly listed U. S. restaurant firms from 1988 to 2007. The study found that estimated cashflow shortfalls were larger for small and medium-size firms than for large firms. Also, full-service restaurants' cashflow shortfalls were larger than those of limited-service restaurants, suggesting relative cashflow risk positions for different restaurant segments. This study provides nonfinancial firms such as restaurant firms with a practical tool to estimate cashflow risk, which could mitigate the probability of financial distress and improve the financial health of firms.

Journal Title

Cornell Hospitality Quarterly

Volume

52

Issue/Number

3

Publication Date

1-1-2011

Document Type

Article

Language

English

First Page

232

Last Page

240

WOS Identifier

WOS:000292842300005

ISSN

1938-9655

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