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Flashcards in Week 1 Deck (36)
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31

acquisitions create value only when 

combined cash flows of the two companies increase due to cost reductions/savings, accelerated revenue growth, or better use of fixed and working capital i.e. synergy w

32

cash

33

cash flow risk

uncertainty about future cash flows

34

ROIC 

and formula

is the return the company earns on each dollar invested in the business:

NOPLAT/ invested capital

35

invested capital

cumulative amount the business has in- vested in its core operations—primarily property, plant, and equipment and working capital.

36

NOPLAT 

Net operating profit less adjusted taxes

net operating profit - (tax rate x net operating profit)