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Operating Cash Flow is calculated using adjusting net income for items (depreciation, changes to accounts receivable, and changes to inventory).
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What factors determine the need for cash in the firm's operations?
Operating Cash Flow is calculated using adjusting net income for items (depreciation, changes to accounts receivable, and changes to inventory).
Why firms hold cash?
there are basically three reasons why firms hold cash, namely speculation precaution transaction
Is the importance of financial managers to firms with large cash inflows greater than for firms with smaller cash flows?
true
A statement of cash flows allows a financial analyst to determine?
If the firm has sufficient funds to pay liabilities.
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.
What is the difference between a financial and an operating merger?
Financial MergerA merger in which the firms involved will not be operated as a single unit and from which no operating economies are expected. The incremental post-merger cash flows are simply the expected cash flows of the target firm.Operating MergerA merger in which, operations of the firms involved are integrated, in the hope of achieving synergistic benefits. In this case forecasting future cash flows is more difficult.
Why do you think it is necessary to do a reconciliation for the cash flow from operations?
Why do you think it is necessary to do reconciliation for the cash flow from operations?
What three sources of cash allow a company to continue its operations?
Cash from Operations (Sales/Accounts Receiveable) Cash from Loans Cash from Capital Investment/Stock issuance (Equity)
How does the capital consumption allowance affect the firms cash flows?
answer the question
What factors determine the need for cash in the firm's operation?
Operating Cash Flow is calculated using adjusting net income for items (depreciation, changes to accounts receivable, and changes to inventory).
What is the formula for free cash flow?
FREE CASH FLOW FORMULA IS: CASH GENERATED FROM OPERATION - CASH EXPENDIRTURES IN OPERATIONS
WHAT measure would be most useful in comparing the operating profitability of two firms in different industries?
cash in divided by cash out
