Week 1 Flashcards
(15 cards)
Market Value
the true value of any asset - aka the amount of cash we would get if we sold it
Book/Accounting value
amount shown on the balance sheet - the price you paid for them, minus depreciation.
Accounting income
Income statements contain non cash, most important depreciation
Cash Flow
timing of inflow and outflow of cash is critical in estimating market value
Average tax rate
Total amount of tax bill divided by taxable income
Marginal tax rate
amount you would be taxed if you made one more dollar
Cash flow from Assets equation for identity
Cash flow from assets = cash flow to creditors(bondholders) + cash flow to stockholders (owners)
Cash flow from assets equation
cash flow from assets = operating cash flow - net capital spending - change in networking capital
NWC
Net working capital
Operating cash flow equation
EBIT + depreciation - taxes
Net capital spending equation
Net capital spending = ending net fixed assets - beginning net fixed assets + depreciation
Change in NWC equation
ending NWC - Beginning NWC
Cash flow to creditors equation
cash flow to creditors = interest paid - net new borrowing
Cash flow to stockholders
cash flow to stockholders = dividends paid - net new equity raised
Cash flow focus
How cash is generated from utilizing assets and how it is paid to those who finance the asset purchase
