Firms 3 16 foundations of pearson chapter 3

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Unformatted text preview: xpenses when Recording incurred, rather than when cash is exchanged incurred, • Free Cash Flows Cash flow that is free and available to be distributed to the Cash firm’s investors. firm’s 3 - 16 Foundations of Pearson Chapter 3 Understanding Financial Statements and Cash Flows Free Cash Flows Free cash flows: (After-tax cashflows from operations) Less (Increase or decrease in net working capital) Less (Increase or decrease in gross fixed assets) 3 - 17 Foundations of Pearson Chapter 3 Understanding Financial Statements and Cash Flows Traditional Statement of Cash Flows • Three sections: – Cash flows from Operating Activities – Cash flows from Investing Activities – Cash flows from Financing Activities 3 - 18 Foundations of Pearson Chapter 3 Understanding Financial Statements and Cash Flows After-Tax Cash Flows From After-Tax Operations Operations Operating Income (EBIT) + Depreciation - Income tax expense = After-tax cash flows from operations 3 - 19 Foundations of Pearson Chapter 3 Understanding Financial Statements and Cash Flows Change in Operating Working Capital Change in operating working capital = Change (change in current assets) (change in current liabilities) (change 3 - 20 Foundations of Pearson Chapter 3 Understanding Financial Statements and Cash Flows Compute the Change i...
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