Cash Flow Statements - Indirect method – Reconciliation for Cash from Operations –from Accrual profit to Cash generated. Accrual profit recorded items below that did not involve Cash Action to derive Cash Explanations and reasons for adjustments necessary to derive Cash from Operations [Profit making activities] 1 Depreciation buildings Add back Non cash expense that reduced profit 2 Proceeds from sale of Asset deduct Non cash gain or profit that increased profit 3 Carrying amount of Asset sold
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Modèles du Free Cash Flow Thèmes choisis en gestion – États financiers et placements (ADMI 3500) Les exemples sont tirés du livre : Stowe‚ J. D.‚ Robinson‚ T.R.‚ Pinto‚ J. E. et Henry ‚ Equity asset valuation‚ Second Edition‚ 2010‚ CFA Institute Investment Series 2 1. Introduction Les modèles d’évaluation basés sur les flux monétaires actualisées (DCF model) considèrent la valeur intrinsèque d’une action comme étant la valeur actualisée des flux monétaires espérés. Dans ce chapitre
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Questions I. 1. Major Sources Major Uses 2. Is CFO>0? CFO compared to Net Income 3. CFO>Capex? 4. CFO>Capex + Dividends 5. Excess Cash 6. Source of cash to pay Capex and/or Dividends 7. Were working capital accounts other than cash and cash equivalents primary sources of cash or users of cash? 8.What other major items affected cash flows? 1991 1. Major sources of cash are cash received from customers and proceeds from the issuance
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Score for selected take: 40% (4/10) Time spent on selected take: 1. Your answer: Multiple Choice 15-1 Cash inflows from operating activities come from a. payment for raw materials. b. gains on the sale of operating equipment. c. collection of sales revenues. d. issuing capital stock. e. issuing bonds. 2. Your answer: Multiple Choice 15-2 Cash outflows from operating activities come from a. collection of sales revenues. b. payment for operating costs
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Weighted Average Cost of Capital (WACC) Calculations The weighted average cost of capital (WACC) is the discount rate used in the discounted cash flow analysis. Usually‚ the WACC is the weighted average of the cost of debt (Kd) and the cost of equity (Ke)‚ since debt and equity are the most common sources of funds for the companies. In general‚ the formula for WACC is the following: As implied by the formula itself‚ if a company does not have interest-bearing debts‚ then its WACC would equal
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Ratio Analysis and Statement of Cash Flows Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms’ performance" (Brealey & Myer & Marcus‚ 2003‚ p. 450). Financial ratios are very useful tools in order to determine the health of a company‚ help managers to make decision‚ and help to compare companies that belong to the same industry in order to know about their performance. Home Depot and Lowe’s are two home improvement chains in the United
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Write Up: Mini Case ofChapter 10: The Basics of Capital Budgeting: Evaluation Cash Flows Oct 2‚ 2014 Executive Summary: We heritage $1 million from our grandfather‚ and we just received our master degree in MBA‚ and because we love to be our own boss and‚ we don not have the skills to trade on the market‚ we decided to purchase an established franchise in the fast-food area to make some investments. We chose two franchises: L‚ Lisa’s Soups‚ Salads‚ & Stuff which serves breakfast and lunch;
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Capital Budgeting Methods and Cash Flow Estimation Tasty Foods Corporation (Part A) November 5‚ 2012 Executive Summary: Tasty Foods has seen phenomenal growth throughout its lifetime in large part due to a continuous development of innovative new products. Although prosperous for Tasty Foods from its birth‚ this is a business initiative that in the past years‚ Tasty Foods has not maintained. Consumers are shifting towards a more health conscious lifestyle and until now Tasty Foods has not presented
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Sen’s Sensibility: Managing the Cash Flow Ronal Sen was looking at the bank statement for the last quarter. He thought about the effort that he underwent to make those payments referred as withdrawals in the bank statement. He recollected the occasions in which he had to request the vendor to delay the deposit of the cheque given by him as he had insufficient balance in the bank. The company he had founded had outgrown the informal processes that he used to control it. He was interested in getting
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investing in one of the two mutually exclusive projects which can effectively utilize the spare space of the Hotel. The first one is an offer made to them by Planet Karaoke pub to sign a four-year lease agreement and earn a monthly rental fee of 170‚000 baht for the first two year and at a 5% increment for the next two years. The second opportunity would be to create their own pub to be called Beach Karaoke. To evaluate the two mutually exclusive projects‚ we have to consider the following criteria:
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