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14 terms

7-7 modifying accounting data for managerial deciaions

10edition financial management
STUDY
PLAY
managerial performance
managers ability to generate operating income (EBIT) with operating assets under their control
operating assets
assets necessary to operate the business
nonoperating assets
cash and short term investmetns
operating current assets
inventory
long term operating assets
plant and equipment
current liabilities
accrued wages, accounts payable, accrued taxes
NOWC
the working capital acquired with investor supplied funds. operating current assets minus operating current liabilities
NOPAT
better measurement for comparing managers performance, it is the amount of profit a company would generate if it had no debt and held no financial assets
FCF
the cash actually available for distribution to investors after the company has made all the investments in fixed assets and working capital necessary to sustain ongoing operations
gross investment in operating cash flow
net investments in operating capital plus depreciation
operating cash flow
NOPAT + Depreciation
FCF
pay interest to debt holders, repay debtholders, pay dividends to shareholders, repurchase stock from shareholders, buy short term investments or other nonoperating assets
FCF corporate
cash flow available for distribution to investors, the value of a firm primarily depends on its expected future FCF
return on investment capital
a way to determine whether growth is profitable is by examining it (nopat/operating capital)