# Study sets matching "cfa cash flow"

Study sets

Diagrams

Classes

Users

The cash flow statement provides inform…

Items on the cash flow statement come f…

Consists of the inflows and outflows of…

Cash flow from investing activities con…

income statement... accrual... cash

1. Income statement items... 2. Changes in balance sheet accounts

Operating cash flows

the acquisition or disposal of long-term assets and certain in…

The cash flow statement provides inform…

income statement... accrual... cash

Items on the cash flow statement come f…

1. Income statement items... 2. Changes in balance sheet accounts

Free Cash Flow to Firm (FCFF)

Free Cash Flow to Equity (FCFE)

WACC (weighted average cost of capital)

Firm value

NI+NCC+[Int*(1-tax rate)]-FCInv-WCInv

FCFF-[Int*(1-tax rate)]+ net borrowings

(weight of equity x required rate of return on equity)... + (weig…

FCFF discounted at the weighted average cost of capital (WACC)

Free Cash Flow to Firm (FCFF)

NI+NCC+[Int*(1-tax rate)]-FCInv-WCInv

Free Cash Flow to Equity (FCFE)

FCFF-[Int*(1-tax rate)]+ net borrowings

dividend & interest payments IFRS & GAAP

direct vs indirect format (CFO)

CFI

common size analysis

IFRS:... interest + dividend inflow - O/I... interest + dividend out…

cash paid for new asset:... end gross A + gross cost of A sold -…

% revenue

dividend & interest payments IFRS & GAAP

IFRS:... interest + dividend inflow - O/I... interest + dividend out…

direct vs indirect format (CFO)

Three Areas of Financial Decision Making

Net Present Value and Internal Rate of…

Applying Net Present Value Rule

Applying the Internal Rate of Return Ru…

Capital Budgeting - Which projects should be accepted?... Capita…

Net Present Value (NPV) and Internal Rate of Return (IRR) allo…

Net Present Value is the sum of all future cash flows discount…

The IRR Rule states:... i. Accept projects where: IRR > Hurdle Ra…

Three Areas of Financial Decision Making

Capital Budgeting - Which projects should be accepted?... Capita…

Net Present Value and Internal Rate of…

Net Present Value (NPV) and Internal Rate of Return (IRR) allo…

Waldrup Industries is considering a pro…

Waldrup Industries has committed to inv…

Bestfoods, Inc. is planning to spend $1…

Trilever is planning to establish a new…

We can calculate the present value of the cash inflows in seve…

he internal rate of return is the discount rate that makes the…

NPV is the sum of the present values of all the cash flows ass…

Using the IRR function in a spreadsheet or an IRR-enabled fina…

Waldrup Industries is considering a pro…

We can calculate the present value of the cash inflows in seve…

Waldrup Industries has committed to inv…

he internal rate of return is the discount rate that makes the…

Free Cash Flow to Firm

Free Cash Flow to Equity

Free Cash Flow from Net Income

Types of Noncash Charges

Cash flow generated by firm's operations in excess of capital…

Cash available to stockholders after funding capital requireme…

Net Income... + Noncash Charges... + Interest Expense * (1 - Tax Rat…

-Amortization of intangibles... -Restructuring charges and other…

Free Cash Flow to Firm

Cash flow generated by firm's operations in excess of capital…

Free Cash Flow to Equity

Cash available to stockholders after funding capital requireme…

Net Present Value (NPV)

Internal Rate of Return (IRR)

Problems with IRR

Holding Period Return

The sum of the present values of a series of cash flows, less…

Discount rate that equates to the PV of a series of cash flows…

1) If simple then works, but if future investments take place…

Percentage change over single period.

Net Present Value (NPV)

The sum of the present values of a series of cash flows, less…

Internal Rate of Return (IRR)

Discount rate that equates to the PV of a series of cash flows…

Firm Value=

Equity Value =

WACC=

The value of the firm if FCFF is growin…

=FCFFt/(1+WACC)t

Firm value - Market value of debt

[MV(Debt)/MV(Debt)+MV(Equity)]*rd(1−Taxrate)... +[MV(Equity)MV(De…

FCFF1/WACC−g ... or... =FCFFo(1+g)/WACC−g

Firm Value=

=FCFFt/(1+WACC)t

Equity Value =

Firm value - Market value of debt

Intuition

Free Cash Flow

FCF Strengths and Limitations

FCFF vs. FCFE

- Cash flows into the firm in the form of revenue... - Cash flows…

FCFF =

**pre-levered cash flow**- Cash available to shareholder…Strengths:... - Used with firms that have no dividends... - Function…

Firm Value = FCFF discounted at WACC (represents value of oper…

Intuition

- Cash flows into the firm in the form of revenue... - Cash flows…

Free Cash Flow

FCFF =

**pre-levered cash flow**- Cash available to shareholder…Capital budgeting

Capital structure

Working capital management

Net Present Value

the allocation of funds to relatively long-range projects or i…

the choice of long-term financing for the investments the comp…

the management of the company's short-term assets (ie inventor…

the present value of its cash inflows minus the present value…

Capital budgeting

the allocation of funds to relatively long-range projects or i…

Capital structure

the choice of long-term financing for the investments the comp…

What are the 3 Categories Cash Flows ar…

How are non-cash investing & financing…

What are examples of non-cash investing…

IFRS vs. US GAAP in preparing Cash Flow…

1. Cash Flow from Operating Activities (CFO): Day-to-day activ…

Non cash investing & financing activities are NOT report on th…

1. Barter transactions... 2. Issuance of common stock for divide…

Classification of cash flows: IFRS offers more flexibility reg…

What are the 3 Categories Cash Flows ar…

1. Cash Flow from Operating Activities (CFO): Day-to-day activ…

How are non-cash investing & financing…

Non cash investing & financing activities are NOT report on th…

For the year ended December 31, 2007, G…

Which of the following transactions wou…

How would a stock split be reported on…

The RR Corporation had cash flow from o…

B... Only the acquisition of common stock of the affiliate for…

A... The purchase of plant and equipment with financing provid…

A... No cash is involved in a stock split--shares are exchanged…

B... Free cash flow to equity (FCFE) is generally defined as ca…

For the year ended December 31, 2007, G…

B... Only the acquisition of common stock of the affiliate for…

Which of the following transactions wou…

A... The purchase of plant and equipment with financing provid…

NPV of an investment project

IRR

NPV rule

IRR rule

Is the PV of expected cash inflows associated with the project…

The discount rate that makes the NPV = 0

Accept a project if NPV > 0

Accept a project if the IRR > required rate of return

NPV of an investment project

Is the PV of expected cash inflows associated with the project…

IRR

The discount rate that makes the NPV = 0

Cash Flow Statements

口诀

Cash Flow Statements... Cash flow classifi…

Cash Flow Statements数据来源

资产增加是花钱，现金减少用减号... 资产减少是卖钱，现金增加用加号... 负债增加是借钱，现金增加用加号... 负债减少是还钱，现金减少用减号

• CF statement is not used to determine a company's monthly ca…

Cash Flow Statements

口诀

资产增加是花钱，现金减少用减号... 资产减少是卖钱，现金增加用加号... 负债增加是借钱，现金增加用加号... 负债减少是还钱，现金减少用减号

Q. 11.31.j Using FCFF, what is the valu…

Q. 11.31.d Find per share value using F…

Q. Earnings per share = 4.50.... • Capital…

Q. Earnings per share = 4.50.... • Capital…

A. FCFF in Year 0 is equal to EBIT(1 − tax rate) + Depreciatio…

A. Step 1: Calculate each year's FCFE and discount at the requ…

A. Base-year FCFE = EPS − (capital expenditures − depreciation…

A. Value per share = (3.80 × 1.05) / (0.12 − 0.05) = 57.00. Yo…

Q. 11.31.j Using FCFF, what is the valu…

A. FCFF in Year 0 is equal to EBIT(1 − tax rate) + Depreciatio…

Q. 11.31.d Find per share value using F…

A. Step 1: Calculate each year's FCFE and discount at the requ…

three components of cash flow (US GAAP…

CFO types

CFI

CFF

CFO, CFI, CFF

+: cash received from customers, cash dividends, cash interest…

purchases of PPE, proceeds from sale of assets, investments in…

issues, repurchase and redemption of: common stock, preferred…

three components of cash flow (US GAAP…

CFO, CFI, CFF

CFO types

+: cash received from customers, cash dividends, cash interest…

dividends profitability

FCFF

FCFE

FCFF WACC

Use FCFF or FCFE when... 1. The firm doesn't pay ____________ or…

The cash available to all the firm's investors, including stoc…

The amount that is left after a firm has met all of its obliga…

The value of a firm is the present value of the expected _____…

dividends profitability

Use FCFF or FCFE when... 1. The firm doesn't pay ____________ or…

FCFF

The cash available to all the firm's investors, including stoc…

The three major classifications of acti…

The sale of a building for cash would b…

Which of the following is an example of…

A conversion of a face value $1 million…

B is correct. Operating, investing, and financing are the thre…

B is correct. Purchases and sales of long-term assets are cons…

C is correct. Payment of dividends is a financing activity und…

C is correct. Non-cash transactions, if significant, are repor…

The three major classifications of acti…

B is correct. Operating, investing, and financing are the thre…

The sale of a building for cash would b…

B is correct. Purchases and sales of long-term assets are cons…

The three major classifications of acti…

The sale of a building for cash would b…

Which of the following is an example of…

A conversion of a face value $1 million…

B is correct. Operating, investing, and financing are the thre…

B is correct. Purchases and sales of long-term assets are cons…

C is correct. Payment of dividends is a financing activity und…

C is correct. Non-cash transactions, if significant, are repor…

The three major classifications of acti…

B is correct. Operating, investing, and financing are the thre…

The sale of a building for cash would b…

B is correct. Purchases and sales of long-term assets are cons…

Compound interest

Nominal Risk Free Rate

Interest rate

Ordinary annuity vs Annuity due

earn interest on principle and interest

real risk free rate + inflation rate

Also called... 1. Required rate of return... 2. Discount rate... 3. Opp…

Ordinary annuity: end when t = 1... Annuity due: beginning when t…

Compound interest

earn interest on principle and interest

Nominal Risk Free Rate

real risk free rate + inflation rate

The three major classifications of acti…

The sale of a building for cash would b…

Which of the following is an example of…

A conversion of a face value $1 million…

B is correct. Operating, investing, and financing are the thre…

B is correct. Purchases and sales of long-term assets are cons…

C is correct. Payment of dividends is a financing activity und…

C is correct. Non-cash transactions, if significant, are repor…

The three major classifications of acti…

B is correct. Operating, investing, and financing are the thre…

The sale of a building for cash would b…

B is correct. Purchases and sales of long-term assets are cons…

exam focus

net present value

internal rate of return

NPV decision rules

use CFs functions on calculator to calculate the NPV and IRR;…

the pv of the CFs - the initial

npv = 0

accept if NPV>0 because the project could increase shareholder…

exam focus

use CFs functions on calculator to calculate the NPV and IRR;…

net present value

the pv of the CFs - the initial

The three major classifications of acti…

The sale of a building for cash would b…

Which of the following is an example of…

A conversion of a face value $1 million…

B is correct. Operating, investing, and financing are the thre…

B is correct. Purchases and sales of long-term assets are cons…

C is correct. Payment of dividends is a financing activity und…

C is correct. Non-cash transactions, if significant, are repor…

The three major classifications of acti…

B is correct. Operating, investing, and financing are the thre…

The sale of a building for cash would b…

B is correct. Purchases and sales of long-term assets are cons…

Operating Cash Flows - Inflows

Operating Cash Flows - Outflows

Investing Cash Flows - Inflows

Investing Cash Flows - Outflows

*cash collected from customers... *interest and dividends receiv…

*Cash paid to employees and suppliers... *cash paid for other ex…

*sale proceeds from fixed assets... *sale proceeds from debt and…

*acquisition of fixed assets... *acquisition of debt and equity…

Operating Cash Flows - Inflows

*cash collected from customers... *interest and dividends receiv…

Operating Cash Flows - Outflows

*Cash paid to employees and suppliers... *cash paid for other ex…

Net Present Value

Internal Rate of Return

NPV decision rule

Mutually exclusive projects

present value of expected cash inflows and outflows associated…

rate of return that equates the PV of an investment's expected…

1. accept projects with a positive NPV. positive NPV projects…

only one can be accepted... the acceptance/rejection of one proje…

Net Present Value

present value of expected cash inflows and outflows associated…

Internal Rate of Return

rate of return that equates the PV of an investment's expected…