Classified in Economy

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Chapter 1: Intro to Finance

3 Decisions: Investing, financing, working capital management

Operating Goals: Liquidity, profitability, growth, stability

Governing Objective: Maximize shareholder value

Chapter 2: Cash Flow Identity

Cash From Assets = Cash to Bondholders + Cash to Shareholders

Cash From Assets = Operating Cash Flow – Capital Expenditures – Δ Net Working Capital

Operating Cash Flow = Net Income

                                    + Depreciation

                                    + Interest Expense

Capital Expenditures = Δ Net Fixed Assets

                                   + Depreciation

Δ Net Working Capital = Ending WC

                                       – Beginning WC

Cash From Bondholders = (Interest Expense)

                                        + Δ Loans

Cash From Shareholders = (Dividends)

                                        + Δ Equity

Chapter 3: Statement of Cash Flows and Ratios

Operating Activities

Net Income


Δ in Current B/S accounts (exc. Cash)

Investing Activities

(Δ Net Fixed Assets)


Financing Activities


Long-term Debt

Common Stock (source if )

Dividends (net income – Δ retained earnings)

Net Δ In Cash

Ending – Beginning Cash









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