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Should a firm that has higher free cash flows have a higher value?
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Cash flow Vs funds flow?
Cash flows and fund flows
What does time dependence of cash flows mean?
In any project, Cash flows of year two is dependent with cash flows of year one so it is called time dependency of cash flows. For example: if public reacted positively high in the market for a new product that introduced by a company, resulting high initial cash flows, then cash flows in future periods are also likely to be high. Therefore, it is time dependency of cash flows. S0193585
What does a statement of cash flows show?
A statement of cash flows is also called a cash flow statement. The statement of cash flows is a cash basis report that shows the inflows and outflows of cash for the operating, investing and financing resources of a business.
Cash flows from interest received are reported in the statement of cash flows as part of?
Operating activities
What are operating cash flows?
operating cash flows are all those cash inflows and outflows due to basic business operating activities.
If most investors expect the same cash flows from companies A and B but are more confident that A's cah flows will be closer to their expected value WHICH company should have the higher stock price?
Investors in the company will drive the stock price up for Company A if they are more confident that Company A's cash flow will be closer to their expected value. Company A's stock price will be higher than Company B.
The present value of future cash flows has what relationship to interest rate?
The present value of future cash flows is inversely related to the interest rate.
How do free cash flows and the weighted average cost of capital interact to determine a firms value?
Free cash flows represent the cash generated by a firm that is available to be distributed to investors. The weighted average cost of capital (WACC) is the average rate of return required by investors in order to finance the firm's operations. By discounting the free cash flows at the WACC, we can determine the present value of those cash flows, which ultimately determines the firm's value. If the present value of the free cash flows exceeds the firm's invested capital, then the firm is considered to have positive value.
Is valuation of a financial asset based on concept of determining the present value of future cash flows?
How is the value of any asset whose value is based on expected future cash flows determined?
What is enterprise value?
Enterprise value is the present value of free cash flows a company can generate.Enterprise Value = Market Value of Equity + Debt - Cash
What are the Effect of operating lease payment on cash flow statement?
Higher cash flows from financing Lower cash flows from operations Lower liabilities Lower assets Higher current ratio Lower debt to equity ratio Higher asset turnover ratio
What is undiscounted cash flows?
Undiscounted cash flows is a term commonly used in real estate sector. This does not take into consideration the value of time and in the future the value of a tangible asset will depreciate.
What is the relationship between present value factor and annuity present value factor?
Present value annuity factor calculates the current value of future cash flows. The present value factor is used to describe only the current cash flows.
What is the relationship between the present value factor and annuity present value factor?
Present value annuity factor calculates the current value of future cash flows. The present value factor is used to describe only the current cash flows.
Cash flows more important than profits?
1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
Why is impairment tested using undiscounted future cash flows rather than the present value of future cash flows?
Original cashlow to match principal
The present value of the expected future cash flows of an asset represents the asset's?
intrinsic value
