What do CFAs (Cash Flow from Assets) tell us about a business's financial health? They represent the total assets owned by the company. They measure the cash available for distribution to investors after all necessary investments. They show the net profit after taxes. They indicate the total revenue generated by the business.

They measure the cash available for distribution to investors after all necessary investments.

How are CFAs different from the accounting statement of Cash Flows? CFAs are calculated annually, while the statement is monthly. CFAs exclude tax considerations, while the statement includes them. CFAs focus on cash available for distribution, while the statement includes all cash activities. CFAs include only operating activities, while the statement includes financing activities.

CFAs focus on cash available for distribution, while the statement includes all cash activities.

How can one evaluate the effectiveness of CFAs? By analyzing trends and benchmarks, considering higher free cash flow as better. By assessing the company's total asset value. By evaluating the company's stock price fluctuations. By comparing them to the company's net income.

By analyzing trends and benchmarks, considering higher free cash flow as better.

What is the formula for Cash Flow from Assets? Cash Flow to Creditors + Cash Flow to Equity Total Revenue - Total Expenses Operating Cash Flow - Capital Expenditures Net Income + Depreciation

Cash Flow to Creditors + Cash Flow to Equity

How is Cash Flow to Creditors calculated? Interest expense - (End L/T debt - Beg L/T debt) Operating Cash Flow - Taxes Net Income - Dividends Total Revenue - Operating Expenses

Interest expense - (End L/T debt - Beg L/T debt)

What is the formula for Cash Flow from Equity? Dividends paid - (End Equity - Beg Equity) Total Revenue - Total Liabilities Net Income - Interest Expense Operating Cash Flow - Capital Expenditures

Dividends paid - (End Equity - Beg Equity)

What is the same as Cash Flows from Assets? Total Revenue Operating Cash Flow Net Income Total CFs to Creditors and Equity

Total CFs to Creditors and Equity

What is the formula for Net Capital Spending? Operating Cash Flow - Taxes Net Income - Dividends Total Revenue - Operating Expenses End PPE - Beg PPE + Depreciation

End PPE - Beg PPE + Depreciation

How is Change in Net Working Capital calculated? Current year NWC - Last Year NWC Net Income - Dividends Operating Cash Flow - Capital Expenditures Total Assets - Total Liabilities

Current year NWC - Last Year NWC

Cash Flow Analysis and Bond Evaluation: Financial Performance Metrics and Investment Risk

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Finance - Personal Finance

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Cards in this deck(78)

What do CFAs (Cash Flow from Assets) tell us about a business's financial health?

How are CFAs different from the accounting statement of Cash Flows?

How can one evaluate the effectiveness of CFAs?

What is the formula for Cash Flow from Assets?

How is Cash Flow to Creditors calculated?

What is the formula for Cash Flow from Equity?

What is the same as Cash Flows from Assets?

How is Operating Cash Flow calculated?

What is the formula for Net Capital Spending?

How is Change in Net Working Capital calculated?

What is the formula for Net Working Capital (NWC)?

How is Cash Flow From Assets calculated?

How do you determine a bond's current price?

How is a bond's current yield calculated?

How do you calculate a bond's yield to maturity?

How is a bond's yield to call calculated?

How can you determine if a bond is a good investment?

How do companies evaluate the risk of a bond?

What variables impact the future price (value) of bonds?

Why might an investor choose bonds over stocks?

What does a Beta < 1 indicate about a stock's risk?

What does a Beta = 1 indicate about a stock's risk?

What does a Beta > 1 indicate about a stock's risk?

How do you know if you should buy a stock?

What is the Capital Asset Pricing Model (CAPM) formula?

Why do investors sometimes pick 'bad' stocks?

What is the Dividend Growth Model with Constant formula?

What steps are involved in the DCF Model given cash flows for years 1-3?

How do you estimate WACC?

What does WACC represent and how should it be used?

What does the cost of equity represent?

How is the profitability index calculated?

How is NPV calculated?

How is MIRR calculated?

What does NPV mean to a CEO?

What are the drawbacks to using IRR?

What is the difference between IRR and MIRR?

What is the Profitability Index (PI)?

Why is the payback period considered a poor metric?

How does the type of financing impact NPV?

How is the Equivalent Annual Benefit (EAB) calculated?

When and why should we use EAB?

How should you know to launch a line extension?

What are the types of risk associated with projects?

What do you know for certain about your forecast?

How should inflation be handled in forecasts?

How is Bond Book Value determined?

How is Equity Book Value determined?

How is Total Book Value calculated?

How is Debt Market Value determined?

How is Equity Market Value calculated?

How is Total Market Value calculated?

Which is a better measure: Book value or Market value?

What issues need to be considered when using market values?

What is the most critical factor in determining capital structure?

What is a common way to hedge exchange rate risk?

What is a realized exchange gain/loss?

What is an unrealized exchange gain/loss?

How is the amount of shareholder value calculated?

What should be considered when assessing businesses?

What should be focused on when determining investment cost?

How do investment dollars and new working capital affect cash flow?

How is cannibalization accounted for in revenue?

What should be done with after-tax cash?

How is EBIT calculated?

When should interest expense be subtracted?

How can the value of a company be increased?

What is the biggest advantage of using debt?

What is a disadvantage of using debt?

What are critical factors in determining strategic alignment?

What characterizes a high growth plan?

What are dividends?

How is a tax shield calculated?

What steps are involved in calculating After Tax Cash Flow?

What is the payment at call equal to?

What is the payment at maturity equal to?

What is the payment of the bond equal to?

How are Free Cash Flows calculated?

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Cash Flow Analysis and Bond Evaluation: Financial Performance Metrics and Investment Risk

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