Free Cash Flow
Management 300 with Moore at Arizona State University - Tempe
About this deck
By: Andrew Baer
Textbook:
Organizational & Management Leadership MGT 300 -W.P. Carey School of Business- (Arizona State University)
Created: 2009-02-26
Size: 16 flashcards
Views: 2
Textbook:
Organizational & Management Leadership MGT 300 -W.P. Carey School of Business- (Arizona State University)Created: 2009-02-26
Size: 16 flashcards
Views: 2
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Operating Cash Flow (OCF):
EBT + Interest ? Cash Paid Taxes + Depreciation Expense
also OCF=
EBIT ? Cash Paid Taxes + Depreciation Expense
EBIT ? Cash Paid Taxes + Depreciation Expense
After-tax oper earning stream without leverage charges + depreciation expense
Change in Net Operating Working Capital =
?Current Assets - ?Current Liabilities (non-interest bearing)
Where, ? = Value at time 1 ? Value at time 0
Note: Net positive investment in working capital would mean less cash available for our investors
Changes in Fixed and Other Assets:
Use gross assets and not net fixed assets.
Net investment in assets reduces the cash available for our investors
Net investment in assets reduces the cash available for our investors
FCFfirm=
OCF ? {Cash used to finance additional assets during this year}
Extensions ? Valuing the Firm
Take the present value of all the future cash flows in order to value the firm.
OCF = EBT + Int - Taxes + Deprec
= 200 + 60 - 68 + 100 = 292
FCF =
OCF ? ? Operating Working Capital - ? Fixed and Other Assets
= 292 ? 40 ? 80 = 172
= 292 ? 40 ? 80 = 172
Free Cash Flow from a Financing Perspective:
That is, negative cash goes to investors and positive cash came from investors.
interest paid to lenders
(negative)
increase in short-term debt
(positive)
increase in long-term debt
(positive)
dividends paid to shareholders
(negative)
increase in outstanding stock ? new issue
(positive)
About this deck
By: Andrew Baer
Textbook: Organizational & Management Leadership MGT 300 -W.P. Carey School of Business- (Arizona State University)
Created: 2009-02-26
Size: 16 flashcards
Views: 2
Textbook:
Organizational & Management Leadership MGT 300 -W.P. Carey School of Business- (Arizona State University)Created: 2009-02-26
Size: 16 flashcards
Views: 2
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have used this website for three exams, and I see a huge difference in my test results.”
Naj
Naj