Cash Flow Statements

Week 4

calculate net operating cash flow

pre-tax profit +non-cash cost-changes in work capital=cash generated from operation-tax& interest

calculate strategic net change in cash flow

net operating cash flow - investing activity+financing activity

cash coversionratio equation

cash generated from profit/operating profit x 100

what is capital expenditure

spending on long term physical productive asset

also known as capex/capital investment

capex to revenue

capital expeniditure / revenue

name two analytical issues with capex to revenue

doesn’t take into account most expenditure on intangibile asset

can be volatile from one year to next

name two types of cash flow metrics

ebitda

fcf

name a pro and con of ebitda

convenient to use

ignores the cost of investment and capex

over simplisticc

ebitda calculation

operating profit+depreciation and amortisation

pro and con of fcf

pro

takes investment cost into account

more in detiak

con

used too often by dealmakers over optimistic view

how to calculate fcf

cash generated from op -capital expenditure-tax