# 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

Cash flow statement

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

An analyst can use this statement to determine whether:... - regu…

Consists of the inflows and outflows of cash resulting from tr…

Consists of the inflows and outflows of cash resulting from th…

Consists of the inflows and outflows of cash resulting from tr…

Cash flow statement

An analyst can use this statement to determine whether:... - regu…

Cash flow from operating activities

Consists of the inflows and outflows of cash resulting from tr…

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)

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…

Net Present Value (NPV)

Internal Rate of Return (IRR)

Holding Period Return

Total Return

The present value of expected cash inflows associated with the…

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

The percentage change in the value of an investment over the p…

The percentage change in the value of an investment over the p…

Net Present Value (NPV)

The present value of expected cash inflows associated with the…

Internal Rate of Return (IRR)

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

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…

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…

Free Cash Flow to Firm (FCFF)

Free Cash Flow to Equity (FCFE)

FCFF vs. FCFE

When do you use FCFE?

Cash available to shareholders and bond holders after taxes, c…

Cash available to equity holders after payments to bondholders…

Firm value = FCFF discounted at WACC... Equity value = FCFE disco…

When capital structure is stable

Free Cash Flow to Firm (FCFF)

Cash available to shareholders and bond holders after taxes, c…

Free Cash Flow to Equity (FCFE)

Cash available to equity holders after payments to bondholders…

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

Money-weighted rate of return definitio…

Time-weighted rate of return definition

Holding Period Return/Yield Formula

Bank Discount Yield

It is essentially the IRR on a portfolio. The timing and amoun…

It measures the compound growth rate of $1 initial investment…

Money-weighted rate of return definitio…

It is essentially the IRR on a portfolio. The timing and amoun…

Time-weighted rate of return definition

It measures the compound growth rate of $1 initial investment…

Cash flow from operating activities (CF…

Cash flow from investing activities (CF…

Cash flow from financing activities (CF…

noncash investing and financing activit…

sometimes referred to as "cash flow from operations" or "opera…

consists of the inflows and outflows of cash resulting from th…

consists of the inflows and outflows of cash resulting from tr…

are not reported in the cash flow statement since they do not…

Cash flow from operating activities (CF…

sometimes referred to as "cash flow from operations" or "opera…

Cash flow from investing activities (CF…

consists of the inflows and outflows of cash resulting from th…

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…

B is correct. Operating, investing, and…

B is correct. Purchases and sales of lo…

C is correct. Payment of dividends is a…

C is correct. Non-cash transactions, if…

The three major classifications of activities in a cash flow s…

The sale of a building for cash would be classified as what ty…

Which of the following is an example of a financing activity o…

A conversion of a face value $1 million convertible bond for $…

B is correct. Operating, investing, and…

The three major classifications of activities in a cash flow s…

B is correct. Purchases and sales of lo…

The sale of a building for cash would be classified as what ty…

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…

B is correct. Operating, investing, and…

B is correct. Purchases and sales of lo…

C is correct. Payment of dividends is a…

C is correct. Non-cash transactions, if…

The three major classifications of activities in a cash flow s…

The sale of a building for cash would be classified as what ty…

Which of the following is an example of a financing activity o…

A conversion of a face value $1 million convertible bond for $…

B is correct. Operating, investing, and…

The three major classifications of activities in a cash flow s…

B is correct. Purchases and sales of lo…

The sale of a building for cash would be classified as what ty…

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

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…

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…

Cash Flow Statement

Cash Flow from Operating activities (CF…

Cash flow from Investing (CFI)

Cash flow from financing (CFF)

Info about a companys cash receipts and cash payments during a…

Inflows and outflows of cash resulting from transactions that…

Inflows and outflows of cash resulting from the acquisition or…

Inflows and outlows of cash resulting from transactions affect…

Cash Flow Statement

Info about a companys cash receipts and cash payments during a…

Cash Flow from Operating activities (CF…

Inflows and outflows of cash resulting from transactions that…

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…

FCFF - Overvew

FCFE - Overview

FCFF from Net Income

FCFF from EBIT

cash that's free to pay out to firm's investors... firm value =…

cash available to common shrhold after funding cap req, workin…

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

FCFF = [EBIT * (1 - tax)] + Dep - FCInv - WCInv

FCFF - Overvew

cash that's free to pay out to firm's investors... firm value =…

FCFE - Overview

cash available to common shrhold after funding cap req, workin…