In: Accounting
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
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.
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