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Free Cash Flow
In financial accounting, free cash flow (FCF) or free cash flow to firm (FCFF) is the amount by which a business's operating cash flow exceeds its working capital needs and expenditures on fixed assets (known as capital expenditures). It is that portion of cash flow that can be extracted from a company and distributed to creditors and securities holders without causing issues in its operations. As such, it is an indicator of a company's financial flexibility and is of interest to holders of the company's Share capital, equity, debt, preferred stock and convertible security, convertible securities, as well as potential lenders and investors. Free cash flow can be calculated in various ways, depending on audience and available data. A common measure is to take the earnings before interest and taxes, add depreciation and amortization (business), amortization, and then subtract taxes, changes in working capital and capital expenditure. Depending on the audience, a number of refinement ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Accounting
Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. This involves the preparation of Financial statement audit, financial statements available for public use. Shareholder, Stockholders, vendor (supply chain), suppliers, banks, employees, government agencies, business owners, and other stakeholder (corporate), stakeholders are examples of people interested in receiving such information for decision making purposes. Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements. On the other hand, International Financial Reporting Standards (IFRS) is a set of accounting st ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Statement Of Cash Flows
In financial accounting, a cash flow statement, also known as ''statement of cash flows'', is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals with cash flow statements. People and groups interested in cash flow statements include: * Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses * Potential lenders or creditors, who want a clear picture of a company's ability to repay * Potential investors, who need to judge whether the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Present Value
In economics and finance, present value (PV), also known as present discounted value (PDV), is the value of an expected income stream determined as of the date of valuation. The present value is usually less than the future value because money has interest-earning potential, a characteristic referred to as the time value of money, except during times of negative interest rates, when the present value will be equal or more than the future value. Time value can be described with the simplified phrase, "A dollar today is worth more than a dollar tomorrow". Here, 'worth more' means that its value is greater than tomorrow. A dollar today is worth more than a dollar tomorrow because the dollar can be invested and earn a day's worth of interest, making the total accumulate to a value more than a dollar by tomorrow. Interest can be compared to Renting, rent. Just as rent is paid to a landlord by a tenant without the ownership of the asset being transferred, interest is paid to a lender by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Intrinsic Value (finance)
In finance, the intrinsic value of an asset or security is its ''value'' as calculated with regard to an inherent, objective measure. A distinction, is re the asset's ''price'', which is determined ''relative'' to other similar assets. The intrinsic approach to valuation may be somewhat simplified, in that it ignores elements other than the measure in question. Options For an option, the intrinsic value is the absolute value of the difference between the current price (''S'') of the underlying and the strike price (''K'') of the option, to the extent that this is in favor of the option holder. Thus, the option is said to have intrinsic value if the option is in-the-money; when out-of-the-money, its intrinsic value is ''zero''. For an option, then, the intrinsic value is the same as the "immediate value" or the "current value" of the contract, which is the profit that could be gained by exercising the option immediately. Formulaically: :IV_= 0 :IV_=\left \vert S-K ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Discounted Cash Flow
The discounted cash flow (DCF) analysis, in financial analysis, is a method used to value a security, project, company, or asset, that incorporates the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management, and patent valuation. Used in industry as early as the 1700s or 1800s, it was widely discussed in financial economics in the 1960s, and U.S. courts began employing the concept in the 1980s and 1990s. Application In discount cash flow analysis, all future cash flows are estimated and discounted by using cost of capital to give their present values (PVs). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value of the cash flows in question; see aside. For further context see ; and for the mechanics see valuation using discounted cash flows, which includes modifications typical for startups, private equity and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Working Capital
Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital. A company can be endowed with assets and profitability but may fall short of liquidity if its assets cannot be readily converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts rece ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cash Conversion Cycle
In management accounting, the Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in inventory in order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth. However, shortening the CCC creates its own risks: while a firm could even achieve a negative CCC by collecting from customers before paying suppliers, a policy of strict collections and lax payments is not always sustainable. Definition ''CCC'' is days between ''disbursing cash'' and ''collecting cash'' in connection with undertaking a discrete unit of operations. : Derivation Cashflows insufficient. The term "Cash Conversion Cycle" refers to the timespan between a firm's disbursing and collecting cash. However, the CCC cannot be directly observed in cashflows, because these are also influenced by investment and financing activities; it must be derived from Statement of Financial Position data associated with the firm's operations. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Dividends
A dividend is a distribution of profits by a corporation to its shareholders, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex-dividend date, though more often than not it may open higher. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings). The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash (usually by bank transfer) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets. The dividend received by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Free Cash Flow To Equity
In corporate finance, free cash flow to equity (FCFE) is a metric of how much cash can be distributed to the equity shareholders of the company as dividends or stock buybacks—after all expenses, reinvestments, and debt repayments are taken care of. It is also referred to as the levered free cash flow or the flow to equity (FTE). Whereas dividends are the cash flows actually paid to shareholders, the FCFE is the cash flow simply available to shareholders. The FCFE is usually calculated as a part of DCF or LBO modelling and valuation. Basic formulae Assuming there is no preferred stock outstanding: : FCFE = FCFF + Net\ Borrowing - Interest*(1-t) where: * ''FCFF'' is the free cash flow to firm; * ''Net Borrowing'' is the difference between debt principals paid and raised; * ''Interest*(1–t)'' is the firm's after-tax interest expense. or : FCFE = NI + D\& A - Capex - \Delta WC + Net\ Borrowing or : FCFE = NI - 1-b) (Capex-D\& A) + (1-b) (\Delta WC) where: * ''NI'' is the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Current Asset
In accounting, a current asset is an asset that can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current fiscal year, operating cycle, or financial year. In simple terms, current assets are assets that are held for a short period. Current assets include cash, cash equivalents, short-term investments in companies in the process of being sold, accounts receivable, stock inventory, supplies, and the prepaid liabilities that will be paid within a year. Such assets are expected to be realised in cash or consumed during the normal operating cycle of the business. On a balance sheet, assets will typically be classified into current assets and long-term fixed assets. The current ratio is calculated by dividing total current assets by total current liabilities. It is frequently used as an indicator of a company's accounting liquidity, which is its ability to meet short-term obligations. The difference between curr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Operating Profit After Taxes
In corporate finance, net operating profit after tax (NOPAT) is a company's after-tax operating profit for all investors, including shareholders and debt holders.Moneyterms.co.ukNOPAT/ref> NOPAT is used by analysts and investors as a precise and accurate measurement of profitability to compare a company's financial results across its history and against competitors. When calculating NOPAT, one removes Interest Expense and the effects of other non-operating activities (non-recurring gains and losses) from Net Income to arrive at a value that approximates the value of a firm's annual earnings. NOPAT is precisely calculated as: NOPAT = (Net Income - after-tax Non-operating Gains + after-tax Non-operating Losses + after-tax Interest Expense) NOPAT doesn't include one-time losses and other non-recurring charges, because they don't represent the true, ongoing profitability of the business. For example, a company may incur acquisition costs that would not be expected to occur in the f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
