Daily BriefsESG

Daily Brief ESG: What Lies Behind the Inability to Come up with Flexible Cash Usage Is and more

In today’s briefing:

  • What Lies Behind the Inability to Come up with Flexible Cash Usage Is


What Lies Behind the Inability to Come up with Flexible Cash Usage Is

By Aki Matsumoto

  • Many Japanese managers have little idea that what belongs to shareholders is net profit and not free cash flow. This has created two problems.
  • If Japanese companies, mostly manufacturers, use dividend payout ratios as a criterion for shareholder returns, cash on hand will not decline even if shareholder returns are increased to some extent.
  • The inability to move beyond the concept of allocating investment and shareholder returns based on increases or decreases in cash may be the reason for the unclear cash allocation policy.

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