Question

In: Accounting

Please explain and describe the question above with an example. 1. Free Cash Flow (Explain and...

Please explain and describe the question above with an example.

1. Free Cash Flow (Explain and describe)

2. Define the dividends to the investor versus cash flow

3. What is different between Nominal and Real Cash flow

Solutions

Expert Solution

Free cash flow

Free Cash Flow, regularly shorten FCF, is a productivity and liquidity ratio that figures the amount more cash an organization creates than it uses to run and extend the business by subtracting the capital expenditures from the operating cash flow. As such, this is the abundance cash a business delivers after it pays the majority of its operating expenses and CAPEX. This is an essential idea since it demonstrates how proficient the business is at producing cash and on the off chance that it can pay its financial specialists an arrival after it supports its operations and extensions.

FCF = FCF = Operating Cash Flow - Capital Expenditures

Dividend vs cash flow

Dividend is the piece of net income that has been disseminated to the common stock holders, The Cash Flow to Investors in the firm, i.e., the debt holders and equity holders, shows how the cash flow produced by the company's assets are conveyed to the debt holders and equity holders. The figuring’s represented on this page will allude to the Balance Sheet and Income Statement which take after.

Nominal vs real cash flow

Nominal cash flow alludes to the real dollar measure of cash that an organization hopes to take in and pay out, with no modification for inflation. This is helpful for envisioning future income and costs. For instance, if an organization needs to extend the amount it will spend on office lease amid the following decade, it could take the dollar measure of its lease, and utilize the normal yearly lease increment to extend the amount it will spend in ensuing years.

Then again, real cash flow is balanced for inflation keeping in mind the end goal to mirror the adjustment in the estimation of cash after some time. Since inflation can fluctuate fundamentally from year to year as should be obvious in this diagram, this can enable "level" to cash flow numbers from various verifiable periods.

--------------------------------------------------------------------------------------------------------------------------

Feel free to comment if you need further assistance J

Pls rate this answer if you found it useful.


Related Solutions

What is a cash flow statement and a cash flow analysis? Please provide a visual example.
What is a cash flow statement and a cash flow analysis? Please provide a visual example.
Describe and explain three different cash flows: operating cash flow, investment cash flow, and cash flow...
Describe and explain three different cash flows: operating cash flow, investment cash flow, and cash flow from financing activities. What is the relative importance of each, and what factors impact your assessment? Does it vary by industry or business maturity? Imagine that you were structuring a business from the ground up--what percentage of cash flow would you target for each of these three types?
Given the following information: Year 1 free cash flow: 40 million Year 2 free cash flow...
Given the following information: Year 1 free cash flow: 40 million Year 2 free cash flow 90 million Year 3 free cash flow 100 million After year 3, expected FCF growth is expected to be 4% The cost of capital is 9% Short term investments is 50 million Debt is currently 25 million Preferred shock is 5 million There are 20 million outstanding stock shares. 1. Calculate the intrinsic stock price . If the current stock price was $100.00, would...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow 90 m Year 3 Free cash flow 100 m After year 3, expected FCF growth is expected to be 4% The cost of capital is 9% Short term investments = 50 million Debt is currently 25 million Preferred stock = 5 million There are 20 million outstanding stock shares. 1. Calculate the intrinsic stock price. 2. If the current stock price was $100.00, would...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow 90 m Year 3 Free cash flow 100 m After year 3, expected FCF growth is expected to be 4% The cost of capital is 9% Short term investments = 50 million Debt is currently 25 million Preferred stock = 5 million There are 20 million outstanding stock shares. 1. Calculate the intrinsic stock price. 2. If the current stock price was $100.00, would...
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach....
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm?
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach....
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm? Please i need a new answer.
how do you get free cash flow from the income and balance sheet please explain it...
how do you get free cash flow from the income and balance sheet please explain it step by step.
A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to...
A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to grow by 15% per year for the next 10 years and then grow by 3% per year thereafter. Investors required rate of return is 11%. What is the current value of the stock? a. $11,300,755,080 b. $2,250,000,000 c. $5,404,011,121 d. $1,636,363,636
Can free cash flow be a negative number? What does a lack of free cash flow...
Can free cash flow be a negative number? What does a lack of free cash flow indicate for a business? Please indicate why free cash flow may be a better indicator than Cash Flows from Operating Activities of financial strength.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT