LETTER: Rabelani Dagada unaware of basic facts of research
It is apparent from Dr Rabelani Dagada’s letter (Hoarding of cash is real, November 10) that he is unaware of the basic facts from our study, which we discussed in our article (Context and analysis show SA’s top firms are not hoarding cash, September 18), or he chose to ignore them. We also find some of his arguments incoherent. Our study focused on cash holdings of companies to assess the conclusion that SA corporates are hoarding cash. In contrast, the University of Johannesburg study Dr Dagada references assessed company "reserves", which refers to retained earnings in the equity on their balance sheets. There is no necessary relationship between reserves and cash — reserves can be invested, paid out as dividends or used to settle debt, while cash levels are affected by operating cash flows, asset sales and purchases, borrowings, equity, and so on. The question of whether there is cash hoarding can therefore not be answered by looking at reserves. One has to assess cash holdings ...
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