{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

L_5_ - Outline Lecture 5 Lecture Organization Cash...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Outline Lecture 5 Lecture Organization Cash Flows (continue)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
The Concept of Cash Flow Cash flow analyzes how cash is generated from utilizing assets and how it is paid to those that finance the purchase of the assets
Background image of page 2
Cash Flows Between the Firm and the Financial Markets
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Cash Flow Summary I. The cash flow identity Cash flow from assets = Cash flow to creditors (bondholders) + Cash flow to stockholders (owners) II. Cash flow from assets = Operating cash flow – Net capital spending – Additions to net working capital (NWC) III. Cash flow to creditors = Interest paid – Net new borrowing IV. Cash flow to stockholders = Dividends paid – Net new equity raised
Background image of page 4
Cash Flow Summary Cash flow from assets = Operating cash flow – Net capital spending – Additions to net working capital (NWC) where Operating cash flow = Earnings before interest and taxes (EBIT) + Depreciation – Taxes Net capital spending = Ending net fixed assets – Beginning net fixed asset + Depreciation Change in NWC = Ending NWC – Beginning NWC
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Hermetic, Inc. Balance Sheet as of December 31 ($ in thousands) Assets 2005 2006 Current assets Cash $ 45 $ 50 Accounts receivable 260 310 Inventory 320 385 Total $ 625 $ 745 Fixed assets Net plant and equipment 985 1100 Total assets $1610 $1845
Background image of page 6
Hermetic, Inc. Balance Sheet (concluded) Liabilities and equity 2005 2006 Current liabilities Accounts payable $ 210 $ 260 Notes payable 110 175 Total $ 320 $ 435 Long-term debt 205 225 Stockholders’ equity Common stock and paid-in surplus 290 290 Retained earnings 795 895 Total $1085 $1185 Total liabilities and equity $1610 $1845
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Income Statement ($ in thousands) Net sales
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}