From the signs (+/−) of the three cash flows — operating, investing and financing — using the Dickinson (2011) model. Their combination indicates whether the firm is in introduction, growth, maturity, shake-out or decline.
Where does “what typically follows” come from?
From Selurio's own empirical panel — 14 public companies on the Bulgarian Stock Exchange over 2006–2021, compiled from their published annual reports. It shows what usually happens in a normal year and in a recession; that's a historical tendency, not a prediction.
Is this a forecast or investment advice?
No. The result is an educational illustration based on assumptions you set — not a forecast, and not investment advice or a recommendation. You make the decision.
Calculators · Cycle profile
Company cycle profile
Classify a company by the signs of its three cash flows and see what usually follows in Bulgaria — in a normal year and in a recession. Data: 14 Bulgarian Stock Exchange companies, 2006–2021.
An educational tool built on a small sample (14 companies, two recessions). It shows direction and order of magnitude, not probabilities for a specific company. Not a buy or sell recommendation.
3 of 4 steps completed
The method applies to this company.
Cash-flow phase
Growth
Earning from operations, investing and raising capital — expanding with outside financing.
What usually follows next year
from 31 observed transitions in expansion
Introduction
Growth
Mature
Shake-out
Decline
Growth
55%
Mature
35%
Introduction
6%
Shake-out
3%
Decline
0%
Chance the phase persists next year
55%
Companies moving to a later phase in expansion
17%
Next-year revenue growth (median)
+2%
Capital expenditure / revenue (median)
8%
How the sector reacts · Manufacturing
Revenue in a recession year (median)
-15%
Revenue in expansion (median)
+12%
Revenue drop over 20% in recession (share of companies)
43%
2009 (financial crisis)
-30%
2020 (COVID)
-1%
Organisation vs finances
Answer at least 3 questions to compare the organization with the finances.
Phase × cycle framework
Purchase of fixed assets
Purchase of financial investments
Investment-strategy instruments the framework links to this combination of company phase × cycle phase. A theoretical framework, not an empirical result.
In a normal year GDP growth barely affects the phases — company-specific factors dominate.
For the investor
Growth on outside financing is a normal stage, but in a recession it almost always ends. Watch for the financing flow flipping to repayment — that is the signal of a move to maturity.
For management
Arrange financing before the slowdown, not during it. The key is moving to maturity (less capital raised) without stopping investment.
Assumptions
·The phase follows Dickinson (2011) from the signs of the three net cash flows; an exact zero counts as “−” (Dickinson groups ≤ 0 with the negatives).
·Empirical shares come from 14 Bulgarian Stock Exchange companies over 2006–2021 (217 firm-years, 203 transitions) — surviving companies, individual statements.
·Recession = 2009 and 2020; stagnation = 2012 and 2013 — two different crises, so “recession” here means “like those two”.
·The survey is a self-assessment for cross-checking, not a diagnosis.
·The “phase × cycle → instruments” framework is normative theory, not an empirical result.
·The method was derived for non-financial operating companies; the sample is non-financial too. It does not apply to banks, insurers or holdings (standalone statements).
·The sign of CFF depends on accounting policy: under IAS 7 interest and dividends paid may be operating or financing, and under IFRS 16 lease payments sit in financing. Check the classification in the statements before comparing companies.
·One year is noise: about half of the companies in the sample change phase the next year. The two-year sum and the previous year are there to test stability.
·Turnover limitation: the method targets medium and large companies under the EU SME definition (annual turnover above €10m); the 13 sample companies with real revenue data have turnover between roughly BGN 2m and 520m.
·Currencies use ECB reference rates (a dated static snapshot) and only serve the thresholds and the stress test; the signs of the flows do not depend on the currency.
Formula
Dickinson (2011) phase from the signs of the flows
(operating, investing, financing):
Introduction (−, −, +)
Growth (+, −, +)
Mature (+, −, −)
Decline (−, +, +) and (−, +, −)
Shake-out (−, −, −), (+, +, +), (+, +, −)
Transition share = transitions phase(t) → phase(t+1)
/ all transitions from phase(t)
given the macro state in t+1
CFO
— net cash flow from operating activities
CFI
— net cash flow from investing activities
CFF
— net cash flow from financing activities
Method: Dickinson, V. (2011), Cash Flow Patterns as a Proxy for Firm Life Cycle, The Accounting Review 86(6). Data: Selurio's own panel (14 BSE companies, 2006–2021), recomputed with the method.
Academic models & sources
The tool combines several established academic models. Every result is educational. The frameworks are the work of their authors and are cited below; we implement the method with attribution, without reproducing original figures or tables.
Models that power the tool
Cash-flow phase
Dickinson, V. (2011). Cash Flow Patterns as a Proxy for Firm Life Cycle. The Accounting Review, 86(6), 1969–1994. https://doi.org/10.2308/accr-10130
Validated on publicly listed non-financial firms (US GAAP).
Capital structure (second lens)
DeAngelo, H., DeAngelo, L., & Stulz, R. M. (2006). Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory. Journal of Financial Economics, 81(2), 227–254. https://doi.org/10.1016/j.jfineco.2005.07.005
The continuous RE/TE ratio is the method; the interpretive bands are our presentation.
Small-business stages
Churchill, N. C., & Lewis, V. L. (1983). The Five Stages of Small-Business Growth. Harvard Business Review, 61(3), 30–50 (Reprint 83301). https://hbr.org/1983/05/the-five-stages-of-small-business-growth
An HBR article without a DOI; reproducing the original figures requires the publisher's permission. The stage names and descriptions are cited freely.
Organizational life cycle
Lester, D. L., Parnell, J. A., & Carraher, S. (2003). Organizational life cycle: A five-stage empirical scale. The International Journal of Organizational Analysis, 11(4), 339–354. https://doi.org/10.1108/eb028979
A validated 20-item scale. Our surveys follow the perceptual self-assessment methodology with clear attribution; they do not reproduce the 20 items verbatim.
Financial health
Altman, E. I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. The Journal of Finance, 23(4), 589–609. https://doi.org/10.1111/j.1540-6261.1968.tb00843.x
The original Z-score. We use the 4-factor Z″ variant (balance-sheet values only).
Financial health
Altman, E. I. (2005). An emerging market credit scoring system for corporate bonds. Emerging Markets Review, 6(4), 311–323. https://doi.org/10.1016/j.ememar.2005.09.007
A citable source for the Z″ adaptation for non-manufacturing/private/emerging-market firms (original: Altman, Hartzell & Peck 1995, Salomon Brothers).
The empirical data on Bulgarian firms comes from Selurio's own panel: 14 Bulgarian Stock Exchange companies over 2006–2021, compiled from their published annual financial statements.
Formulas and classification rules are methods and are implemented with attribution. ADIZES® is a registered trademark of the Adizes Institute and is cited conceptually only. Full legal notes are in the Disclaimer.