finance class 4

finance class 4 - Balance Sheet of The firm (Snap Shot of...

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Balance Sheet of The firm (Snap Shot of the Firm-- it’s health)
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The Concept of Cash Flow Cash flow is one of the most important pieces of information that a financial manager can drive from financial statements We will look at how cash is generated from utilizing assets and how it is paid to those that finance the purchase of the assets.
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Cash Flows Between the Firm and the Financial Markets
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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 (fixed assets) – 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
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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 =
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finance class 4 - Balance Sheet of The firm (Snap Shot of...

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