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

    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

    Share

    COinS