This video defines free cash flow, provides an equation for calculating free cash flow, and illustrates the equation with an example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 115060 Edspira
This video explains what the Degree of Operating Leverage is in the context of managerial accounting. The formula for calculating the Degree of Operating Leverage is provided and an example is used to illustrate how the Degree of Operating Leverage can be used to predict how a change in sales will affect a firm's profitability. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 54259 Edspira
http://goo.gl/v7wELP for more free video tutorials covering Business Finance. The objective of this video is to give an overview on operating cycles and cash cycles. Operating cycle can be defined as the length of time between purchasing inventory & receiving cash from sales. On the contrary, the cash cycle is the length of time between paying for the inventory and receiving cash from sales. Moving on, the video explains all the components of operating & cash cycle as well as discusses inventory period, AP period and AR period in greater details. Next, the video shows the calculation of turnover- the number of time a year that the average amount of inventory, receivables or payables are sold, recovered or paid. The video introduces inventory turnover which is the number of times a year that average inventory is sold. Later, it also discusses about the account receivable turnover and account payable turnover subsequent to an appropriate example where it shows all calculations simultaneously.
Views: 17346 Spoon Feed Me
What is Free Cash Flow (FCF) and how do I calculate it? What is Free Cash Flow used for? What is the Free Cash Flow performance of Exxon Mobil (NYSE: XOM), Facebook (NASDAQ: FB), General Electric (NYSE: GE) and General Motors (NYSE: GM)? This Finance Storyteller video provides an in depth look at common and alternative definitions of Free Cash Flow (FCF), compares the profit view and the cash flow view of looking at a company’s performance, and analyzes the Free Cash Flow numbers published by Exxon Mobil, Facebook, General Electric and General Motors. Free Cash Flow is usually defined as: Cash flow not required for operations or reinvestment Cash flow available for distribution among all the securities holders (debt or equity) of an organization Calculation: Cash From Operating Activities (CFOA) minus Capital Expenditures Unfortunately, the Free Cash Flow definitions that companies use are not always the same. Some stay very close to what you see here, but we will also see some alternative definitions along the way in this video. Related videos: Cash Flow Statement explained https://www.youtube.com/watch?v=mZBjsIYrLvM GAAP versus non-GAAP https://www.youtube.com/watch?v=ewzlgnGtfmg&t=74s T-accounting https://www.youtube.com/watch?v=-DjEE6jLe4Y Depreciation https://www.youtube.com/watch?v=6SY8s1_OEro&t=24s Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Views: 7827 The Finance Storyteller
In this video, we look at Free Cash Flow example in excel. Here we calculate FCFF of Alibaba IPO and Box IPO and contrast their free cash flows. Free Cash Flow Example 1 - Calculate FCFF of Alibaba IPO - We calculate FCFF using the EBIT formula here - We note that Free cash flow of Alibaba is positive and stable. - Since FCFF is positive in future years, we can use Discounted Cash Flow valuation to value Alibaba Free Cash Flow Example 2 - Calculate FCFF of Box IPO - Here again, we calculate FCFF using EBIT formula - However, FCFF of Box is negative and is in a dismal state. - Also, FCFF is negative not only in the next few years, but when we do projections over a longer period of time, still is comes out to be negative - therefore, we cannot use DCF valuation here. We must apply relative valuation method to value Box. You can download the FCFF Excel template here - https://www.wallstreetmojo.com/free-cash-flow-firm-fcff/
Views: 5453 WallStreetMojo
Clicked here http://mbabullshit.com/ and WOW I'm shocked how easy so I'm sharing this... share it with your friends too! If You Liked it, Support my Free Videos at https://www.patreon.com/MBAbull Cash Flow Statement Explained In 3 Minutes What does it really mean when we say a company is "earning a lot?" If a company gets $100 this year and has costs and expense of $60, then we can easily say that it "earned" $40, right? But what if... The company makes $100 in sales this year, only collects $80 in cash this year, and then will collect the remaining $20 next year? This year's Cash Flow Statement would only record the actual collected $80... and not the total sales of $100 And what if... the company had $60 in costs, expenses, capital expenditures, and taxes but only paid $50 in cash this year, and will pay the $10 balance next year? This year's Cash Flow statement would only record the paid $50, and not the total costs/expenses of $60 In a Cash Flow statement, the only thing that matters is how much a business gets in cash... and how much it pays in cash. This year's Cash Flow Statement also includes cash collected for previous years' sales or even future years' sales... as long as it's collected THIS YEAR. This year's Cash Flow Statement also includes cash PAID for previous years or even future years' costs, expenses, capital expenditures, and taxes... as long as it's paid THIS YEAR. Note that a Cash Flow statement can be for any time period, and not only a 1-year time period like we used in this simple example. See? So that's the super simplified explanation of a Cash Flow Statement. Would you like to learn how to make your own Cash Flow Statement? Check out my FREE video at MBAbullshit.com . See ya there!
Views: 279906 MBAbullshitDotCom
Every investor should have a basic grasp of the discounted cash flow (DCF) technique. Here, Tim Bennett introduces the concept, and explains how it can be applied to valuing a company.
Views: 485323 MoneyWeek
This video explains what the cash budget is in Managerial Accounting and demonstrates how to put together a cash budget with a comprehensive example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 158893 Edspira
In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. The International Financial Reporting Standards defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid gives rise to operating cash flows. To calculate cash generated from operations, one must calculate cash generated from customers and cash paid to suppliers. The difference between the two reflects cash generated from operations.
Views: 1156 Farhat's Accounting Lectures
http://my.brainshark.com/Working-Capital-and-the-Cash-Conversion-Cycle-412809349 - This is a free excerpt of the full online course "Cash Rules for Entrepreneurs," a cash flow management primer for entrepreneurs and business owners. Purchase the full version, which includes a podcast, book, and review sheets at www.CashRulesforEntrepreneurs.com.
Views: 47166 AdvisorCatalyst
Accounting for Statement of Cash Flows basic overview & understanding of cash flows from operating activities, using the indirect versus direct method to determine operating cash flow, statement of cash flows includes the cash flows from Operating, Investing & Financing activities & beginning/ending cash flows (change in cash for the period), (A) indirect method to determine cash flow for operating activities, start with net income (revenues - expenses), adjust net income by (1) subtracting non-cash revenues & (2) adding back non-cash expenses = cash flow for operating activities, (B) direct method, cash flow equals (cash receipts - cash disbursements), (cash collected from customers -cash paid to suppliers - cash paid for expenses), net income & non-cash revenues & expenses are not used in the calculations, detailed accounting by Allen Mursau
Views: 31829 Allen Mursau
In this tutorial, you’ll learn how to use Free Cash Flow (FCF) Conversion Analysis to determine how “reliable” a company’s EBITDA is, and how much EBITDA actually translates into cash flow from business operations; you’ll also see a few examples of how to use this analysis in valuation and leveraged buyout scenarios. http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Table of Contents: 1:33 Problems with EBITDA 4:12 FCF Conversion Calculation – Example 8:07 How to Use and Interpret FCF Conversion Analysis 13:38 Recap and Summary What’s the Problem with EBITDA? While EBITDA – Earnings Before Interest, Taxes, Depreciation & Amortization – is a common metric in valuations and leveraged buyout scenarios, it is not always accurate. It’s supposed to be a proxy for a company’s Cash Flow from Operations, because just like with CFO you add back D&A and ignore CapEx. So EBITDA, theoretically, should be close to the company’s recurring cash flow generated by its core business operations. However, EBITDA also ignores: -Interest and taxes, both of which could be huge, and both of which ARE reflected in Cash Flow from Operations. -The Change in Working Capital, which could also be very significant, and which is also reflected in Cash Flow from Operations. -CapEx – Yes, Cash Flow from Operations also ignores CapEx, but that practice makes both of these metrics less reliable indicators of a company’s discretionary cash flow and ability to repay debt principal. Solution: FCF Conversion Analysis To tell how reliably a company turns EBITDA into real cash flow, you can compare its Free Cash Flow – defined as CFO minus CapEx – to its EBITDA, and see what percentage its FCF represents. For example, for Foot Locker the percentages range from 30% to over 60%, indicating that the company is turning 30-60%+ of its EBITDA into Free Cash Flow each year. In theory, the higher the FCF Conversion, the better, because it means the company is able to generate more cash flow from its business. However, it also depends on the source of that FCF Conversion – is it driven by policies where customers pay upfront in cash before products are even delivered? If so, that’s very positive because it means the company gets more cash earlier on, on a consistent basis. On the other hand, if it’s driven by one-time tax benefits, non-recurring items, or strange Working Capital treatment, none of those is a positive sign. You can use FCF Conversion to compare peer companies and see which one(s) might be deserving of a higher valuation multiple. For example, HomeAway has a much higher FCF Conversion (around 100%) than many of its peer companies such as PriceLine and TripAdvisor. So you might argue that it should be valued at a higher multiple, even if its growth rates and margins are similar to those of other companies. You can also use FCF Conversion to develop or support your investment thesis in a leveraged buyout or growth equity candidate. For example, we use it in our 7 Days Inn case study to show how the company’s switch to a franchised business model will make it a less capital-intensive business and improve its FCF generation capabilities. Finally, you can use FCF Conversion to determine how much debt a company can take on, and whether that figure should exceed or be below the median figure for peer companies. For example, if the peer companies have around 4x Debt / EBITDA but only ~50% FCF Conversion, but the company you’re analyzing has 75% FCF Conversion, perhaps it can afford to take on more debt – maybe up to 4.5x Debt / EBITDA or even 5x Debt / EBITDA. FCF Conversion is by no means a perfect analysis, but it is a useful tool to assess a company’s ability to generate cash flow and to see how reliable credit-related stats like Debt / EBITDA and EBITDA / Interest really are. RESOURCES: http://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-14-Free-Cash-Flow-Conversion-Slides.pdf http://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-14-Free-Cash-Flow-Conversion.xlsx http://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-14-HomeAway-FCF-Conversion.pdf
Views: 12954 Mergers & Inquisitions / Breaking Into Wall Street
Clicked here http://www.MBAbullshit.com/ and OMG wow! I'm SHOCKED how easy.. Just for instance I possessed a company comprising of a neighborhood store. To put together that center, I invested $1,000 one year ago on apparatus along with other assets. The equipment in addition to other assets have depreciated by 10% in a single year, so now they're valued at only $900 inside the accounting books. In case I was going to make an effort to offer you this company, what amount would an accountant value it? Relatively easy! $900. The cost of the whole set of assets (less liabilities, if any) can give accountants the "book value" of a typical organization, and such is systematically how accountants observe the worth of an enterprise or company. (We employ the use of the word "book" because the worth of the assets are penned within the company's accounting "books.") http://www.youtube.com/watch?v=6pCXd4i7DM0 However, imagine this unique company is earning a juicy cash income of $2,000 annually. You would be landing a mighty incredible deal in the event I sold it to you for just $900, right? I, on the flip side, might be taking out a pretty sour pact in the event I offered it to you for just $900, on the grounds that as a result I will take $900 but I will shed $2,000 per annum! Due to this, business directors (dissimilar to accountants), don't make use of merely a company's book value when assessing the value of an organization.So how do they see how much it really is worth? To replace utilizing a business' books or even net worth (the market price of the firm's assets minus the business enterprise's liabilities), financial managers opt to source enterprise worth on how much money it gets in relation to cash flow (real cash acquired... contrary to only "net income" that may not generally be in the format of cash). Basically, a company making $1,000 "free cash flow" monthly having assets worth a very small $1 would remain to be worth a great deal more versus a larger company with substantial assets of $500 in the event the humongous company is attaining only $1 yearly.So far, how do we achieve the exact value of your business? The simplest way would be to mainly look for the net present value of the total amount of long run "free cash flows" (cash inflow less cash outflow).Needless to say, you will come across much more sophisticated formulas to find the value of a company (which you wouldn't genuinely need to learn in detail, since there are numerous gratis calculators on the web), but practically all of such formulas are in a way driven by net present value of cash flows, plus they are likely to take into consideration a few factors for example growth level, intrinsic risk of the company, plus others.
Views: 307208 MBAbullshitDotCom
In this video, 25.03 – Statement of Cash Flows: Direct Method – Lesson 1, Roger Philipp, CPA, CGMA, first compares and contrasts the two methods for calculating operating activities cash flows. The direct method requires directly analyzing each item on the income statement and converting it from accrual to cash. The indirect method involves starting with net income and indirectly reconciling back to the ending balance on the statement of cash flows via a series of analysis and adjustments. Roger then moves from theory to application by setting up a statement of cash flows example for teaching the direct method. Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Ok, let's move on to operating activity section. Now remember we talked about the statement and cash flows, we said three main areas. Which are what? It's called operating, investing, and financing, then we have our net change, and so on. The thing is, there are two ways to do the operating activity section. So when we talked about net cash provided by operating activities, we ended up with this number here, which was $135.
Views: 45242 Roger CPA Review
How to find Cash Flow Operating Activities using indirect method Hi Guys, This video will show you a simple example how to find the cash flow provided/(used) for operating expenses in a Lemon Stand. Please enjoy it and visit our website at www.i-hate-math.com Thanks for learning ! 00:00 - Cash Flow Operating Activities: INDIRECT METHOD 00:15 - 00:26 - 01:01 - 01:49 - 04:47 - 05:50 - Don't forget to watch our other videos at www.i-hate-math.com 05:59 -
Views: 127743 I Hate Math Group, Inc
This video demonstrates how to prepare a Statement of Cash Flows using the Indirect Method. A comprehensive example is provided to illustrate how an income statement, comparative balance sheet, and additional information are used to create a Statement of Cash Flows from scratch. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 172299 Edspira
Cash flow statement tutorial. How does a cash flow statement work? How do cash balance and cash flow relate to each other? What is cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities? You will find all of these explained in this Finance Storyteller video, including an example of the cash flow statement for Shell (AMS: RDSA). The cash flow statement is one of the three main financial statements. As the cash flow statement explains how much cash has come in and gone out during a year, and what the sources and uses of this cash flow were, you could see the cash flow statement as an explanation of how the cash balance (one of the most important assets) has developed between two balance sheets. Cash is king. It is critical at every stage of a company’s lifecycle. When you open your own business, you need cash to get started. You will need cash to grow and expand. If a company runs out of cash to pay its bills, it’s game over. What you see in a cash flow statement should be a direct reflection of a company’s strategy. Is the company spending enough to build its unique and sustainable competitive advantage? Are customers willing to pay for the products and services that the company supplies? Is the company able to reward its investors for the risk they have taken, by paying a dividend? These and other questions can be answered by analyzing a cash flow statement. It’s nice to have the total numbers of the cash balance as well as the total net cash flow, but it doesn’t tell us much yet about what goes on inside the company. To get a more meaningful look, we have to drill a level deeper into cash flow. That’s why a cash flow statement is split into three sections. The first section will have the word “Operating” in it, the second “Investing”, the third “Financing”. Many companies will call the first section “Cash From Operating Activities” or CFOA, or a variation on that wording like “Cash Flow From Operations”. Cash From Operating Activities is roughly the cash inflow from customers paying the company minus the cash outflow of the company paying for purchases from suppliers, minus the cash outflow of salaries paid to employees, and minus the cash outflow of taxes paid to governments. For most mature companies in good health, the cash flow from operating activities is a net cash inflow. The second section is often called “Cash From Investing Activities”, or a variation on that wording. This is where Capital Expenditures (a cash outflow), acquisitions (a cash outflow) and divestments (a cash inflow) are recorded. Cash From Investing Activities tends to be a net cash outflow for most companies in most years. The third section is often called “Cash From Financing Activities”, or a variation on that wording. This one can go either way: a net cash inflow or a net cash outflow. Does the company need money and attract new debt to finance itself? Then there will be a cash inflow. Does the company have a lot of cash on its balance sheet and no plans to put that cash to any productive use? Then the company might be paying a dividend to shareholders, which is a cash outflow. If you are interested in a more in-depth look at the similarities between two very capital-intensive industries (oil and telecom), please check the blog article on my website: http://www.devroe.org/?p=80 Understanding cash flow is a key element of “getting the picture” of a company. As an investor, analyst, employee or supplier, it is advisable to understand both the actual numbers of past years, as well as the intent going forward. Related videos: Cash flow statement analysis Tesla 2016 through 2018 https://www.youtube.com/watch?v=49TxnoP4u8Y Free Cash Flow explained simply and with examples https://www.youtube.com/watch?v=gl3OLtEX2PM Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Views: 59721 The Finance Storyteller
Premium Course: https://www.teachexcel.com/premium-courses/68/idiot-proof-forms-in-excel?src=youtube Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial shows you how to get the Net Present Value of a project or business venture in the future using excel. You can do this very easily in excel spreadsheets and this will teach you how to do that using the estimated cash flows of a project. The NPV() function is used for the calculations. This is also a basic discounted cash flows example. This includes discount rate and number of periods in order to use the npv function. To follow along with the spreadsheet used in the video and also to get free excel macros, tips, and more video tutorials, go to the site: http://www.TeachMsOffice.com
Views: 270910 TeachExcel
FinTree website link: http://www.fintreeindia.com FB Page link :http://www.facebook.com/Fin... This series of video covers the following points : -There are two ways to estimate the equity value using free cash flows. -An entire firm and all its cash flows (FCFF) are discounted, with the relevant discount rate being the weighted average cost of capital (WACC) because it reflects all the firm’s sources of capital. The value of the firm’s debt is then subtracted to calculate the equity value. -Only the free cash flows to equity (FCFE) are discounted, with the relevant discount rate being the required return on equity. This provides a more direct way of estimating equity value. -In theory, both approaches should yield the same equity value if the inputs are consistent. However, the FCFF approach would be favored in two cases. The firm’s FCFE is negative. -The firm’s capital structure (mix of debt and equity financing) is unstable. The FCFF approach is favored here because a) the required return on equity used in the FCFE approach will be more volatile when the firm’s financial leverage (use of debt) is unstable and b) when using historical data to estimate free cash flow growth, FCFF growth might reflect the firm’s fundamentals better than FCFE growth, which would fluctuate as debt fluctuates. -FCFF and FCFE approaches to valuation -value of a company by using the stable-growth, two-stage, and three-stage FCFF and FCFE models. -appropriate adjustments to net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow from operations (CFO) to calculate FCFF and FCFE. -approaches for forecasting FCFF and FCFE. -approaches for calculating the terminal value in a multistage valuation model -We love what we do, and we make awesome video lectures for CFA and FRM exams. Our Video Lectures are comprehensive, easy to understand and most importantly, fun to study with! -This Video lecture was recorded by our popular trainer for CFA, Mr. Utkarsh Jain, during one of his live CFA Level II Classes in Pune (India).
Views: 21416 FinTree
This video tell us about two things 1) What is Cash Flow Statement? 2) How to prepare it? This video on Cash Flow Statement is useful for Class 11th, class 12th, B.Com, BBA, CA, CS, Accountancy Students, Financial Management students etc. And just because this is an important topic, you should understand it properly. In this Cash Flow Statement, i have discussed Indirect Method. It is based on AS 3.
Views: 119117 Lavish Gupta
Download Financial Statement Analysis Question Bank: http://www.edupristine.com/ca/free-10-day-course/cfa-financial-reporting-and-analysis/ Note: US GAAP accounting principle is used. CFO: refers to the amount of cash accompany generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. CFF: is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. More about CFA on: http://www.edupristine.com/ca/courses/cfa/ About EduPristine: Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, EduPristine is one of the leading Training provider for Finance Certifications like CFA, PRM, FRM, Financial Modeling etc. EduPristine strives to be the trainer of choice for anybody looking for Finance Training Program across the world. Subscribe to our YouTube Channel: http://www.youtube.com/subscription_center?add_user=edupristine Visit our webpage: http://www.edupristine.com/ca
Views: 3225 EduPristine
In this revised tutorial, you’ll learn why Unlevered Free Cash Flow is important, the items you should include and exclude, and how to calculate it for real companies in different industries. You’ll also get answers to the most common questions we receive about this topic at the end. https://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Table of Contents: 1:05 Why Unlevered Free Cash Flow Matters 2:09 Defining Unlevered FCF 3:51 Unlevered FCF for Steel Dynamics 12:08 Unlevered FCF for Snap 13:51 Common Questions and Answers About Unlevered FCF 18:32 Recap and Summary Resources: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-20-Unlevered-FCF-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-20-STLD-DCF.xlsx https://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-20-STLD-FCF-from-Statements.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/107-20-SNAP-FCF-from-Statements.pdf Lesson Outline: A DCF is split into the Explicit Forecast Period (Part 1) and the Terminal Period (Part 2). You always start in Part 1 by projecting the company’s Cash Flows over 5-10 years, and sometimes more than that, and you almost always use Unlevered Free Cash Flow because it doesn’t depend on the company’s capital structure, it’s faster and easier, and it gets you the most consistent results. Unlevered Free Cash Flow should reflect only items that are: 1) Related to or “available” to all investor groups in the company – think of it as “Free Cash Flow to ALL Investors”; and 2) Recurring for the company’s core-business operations. Unlevered FCF corresponds to Enterprise Value, which represents the value of the company’s core-business Assets to ALL investors in the company. As a result, you ignore most items on the financial statements, and Unlevered FCF usually includes only: 1) Revenue 2) COGS and Operating Expenses 3) Taxes 4) Depreciation & Amortization (and sometimes other non-cash charges) 5) Change in Working Capital 6) Capital Expenditures You IGNORE Net Interest Expense, Other Income / (Expense), most non-cash adjustments, most of the CFI section, and the CFF section on the CFS. Example for Steel Dynamics: We include the common items above, and we ignore the Asset Impairment Charges (non-recurring), Net Interest Expense (only available to Debt investors), and Other Income / Expense (non-core-business activity). We include but modify the Income Tax Expense, and instead of Net Income on the CFS, we use NOPAT, equal to EBIT * (1 – Tax Rate), instead. On the Cash Flow Statement, we include the Depreciation & Amortization add-back, exclude Impairment Charges and Gains/Losses (non-recurring), and exclude Stock-Based Compensation (affects only the Equity investors, changes share count, and is not a real non-cash expense). We do include Deferred Income Taxes as well because a DCF should reflect the company’s actual Cash Taxes paid, but they decrease as a % of Income Taxes over time and should not be a major value driver for most companies. Then, we keep everything in Working Capital, we keep CapEx in Cash Flow from Investing but drop everything else, and we ignore everything in Cash Flow from Financing (items are non-recurring, or related to just Equity or just Debt investors). Example for Snap: It’s very similar; keep Revenue, Cost of Revenue, and all Operating Expenses, modify the Income Tax figure, use NOPAT rather than Net Income, and include D&A, Deferred Taxes, the Change in Working Capital, and CapEx. We might include the Purchases of Intangible Assets as well, depending on the company’s plans and how they’re contributing to the business.
This video will explain the concept of Net Present Value (NPV) and take you though several examples using an HP-12C Platinum financial calculator. The HP-12C is ideally suited to these calculations.
Views: 31848 Calculator Expert
How to calculate Cash From Operating Activities (or CFOA) using the direct method. Let me explain to you how to construct a cash flow statement in this short video. This video covers the direct method of cash flow reporting, the companion video covers the indirect method: https://www.youtube.com/watch?v=2tr_6D2SE3w Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Views: 5905 The Finance Storyteller
Clicked here http://www.MBAbullshit.com/ and OMG wow! I'm SHOCKED how easy.. No wonder others goin crazy sharing this??? Share it with your other friends too! Fun MBAbullshit.com is filled with easy quick video tutorial reviews on topics for MBA, BBA, and business college students on lots of topics from Finance or Financial Management, Quantitative Analysis, Managerial Economics, Strategic Management, Accounting, and many others. Cut through the bullshit to understand MBA!(Coming soon!)
Views: 336264 MBAbullshitDotCom
Explanation of the cash flow statement - its components, what they represent, and basic ways to analyze the information. This series was initially developed to train credit and collection professionals. Free eBook available on our web site of the 5 part series Introduction to Financial Statement Analysis from commercial collection agency The Kaplan Group www.kaplancollectionagency.com.
Views: 235814 The Kaplan Group
What are the differences between preparing a cash flow statement using the direct method versus preparing a cash flow statement using the indirect method? The difference between the methods is purely in the section called CFOA, or Cash From Operating Activities. For the sections at the bottom, the direct method and the indirect method use the same line items. In Cash From Investing Activities, the main line items are capital expenditures, proceeds from selling factories or buildings, and business acquisitions or divestments. In Cash From Financing Activities, the main line items are dividends paid, shares issued or repurchased, and issuances or repayments of debt. Here’s the example from FAS95 on reporting CFOA using the direct method. You start off with cash received from customers of 13.9 billion (a positive number, cash inflow), you deduct cash paid to suppliers and employees 12 billion (a negative number, cash outflow), and then account for smaller items such as interest paid 220 million and income taxes paid 325 million. Total net cash provided by operating activities, calculated using the direct method is 1.4 billion, which should be the same if you calculate it by using the indirect method. For another example of using the direct method: https://www.youtube.com/watch?v=hDQzoIX9Ryk Here’s the example from FAS95 on reporting CFOA using the indirect method. When you use the indirect method, you start off with net income, or net profit. In this example, net income is 760 million. Next step in the indirect method is to look for any non-cash items from the P&L. In this example, the main non-cash item is depreciation and amortization, which is 445 million. You deducted depreciation as an expense in order to report the correct amount of EBIT and profit before tax in the income statement, and to calculate the correct amount of corporate income taxes. For cash flow purposes, you will have to add back that same amount of depreciation. The next four items work in a similar way: you make adjustments for items that are treated differently when you recognize profit or costs versus when you record cash receipts or cash disbursements of a company. A key section of the indirect method is in the middle of the page: increases or decreases of working capital items on the balance sheet. If accounts receivable goes up, then cash goes down, in this case 215 million. If inventory decreases, then cash goes up, in this case 205 million. Etcetera. Total net cash provided by operating activities, calculated using the indirect method is 1.4 billion. For another example of using the indirect method: https://www.youtube.com/watch?v=2tr_6D2SE3w So why would you use the direct method (which in some countries is rare)? First of all, FAS95 encourages (but doesn’t mandate) companies to report gross cash receipts and gross cash payments. Two of the FASB members arguing in favor of mandatory use of the direct method at the time FAS95 was being discussed and reviewed, said that it is more informative and more consistent with the primary purpose of a statement of cash flows. FAS95 mentions that the direct method may help investors to estimate future operating cash flows based on historical detail. Lastly, International Accounting Standard 7 (the FAS95 equivalent in IFRS) has similar wording: “encouraging companies to use the direct method”. I have a lot of material available on the Finance Storyteller YouTube channel that can help you get a good understanding of the topic of cash flow and related items. For example, I have full walk-throughs for you of both direct method and indirect method cash flow statements! Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Views: 14721 The Finance Storyteller
A company's growth is really important for Rule #1 Investors to understand because we use the growth rate to calculate how much we should pay for the company. The big four growth rates that we use to find our price are: Sales Growth Rate, Earnings Growth Rate, Equity Growth Rate, and Operating Cash Flow Growth Rate. In today's video, I'll explain why each of these growth rates are important and how we use them in Rule #1 Investing. [FREE Download] The Must-Have Checklist for Investors: http://bit.ly/28Nyy4k _____________ Learn more: Subscribe to my channel for free stuff, tips and more! YouTube: http://budurl.com/kacp Facebook: https://www.facebook.com/rule1investing Twitter: https://twitter.com/Rule1_Investing Google+: + PhilTownRule1Investing Pinterest: http://www.pinterest.com/rule1investing LinkedIn: https://www.linkedin.com/company/rule... Blog: http://bit.ly/27RLvRH Podcast: http://bit.ly/1KYuWb4
Views: 5378 Phil Town's Rule #1 Investing
How do you project changes in net working capital (NWC) when building your DCF and calculating free cash flow? In this video I cover the different ratios that can be used to project NWC rather than using the simple percentage of sales method. Instead, for the most accurate results, the analyst should project the individual components of non-cash current assets and non-interest bearing current liabilities to better project FCF. In this video we cover; - Days sales outstanding (DSO) - Days inventory held (DIH) - Inventory Turns - Days payable outstanding (DPO) If you have any other questions, please comment below. If you enjoyed the video and found it helpful, please like and subscribe to FinanceKid for more videos soon! For those who may be interested in finance and investing, I suggest you check out my Seeking Alpha profile where I write about the market and different investment opportunities. I conduct a full analysis on companies and countries while also commenting on relevant news stories. http://seekingalpha.com/author/robert-bezede/articles#regular_articles
Views: 2841 FinanceKid
The concept of discounted cash flow (net present value) as a method of investment appraisal is covered in this revision video.
Views: 6458 tutor2u
In this Enterprise Value lesson we take a look at the rules of thumb to figure out what should be added or subtracted when you calculate it. By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" This also covers a short case study based on Vivendi (a leading media/telecom conglomerate based in France), Everyone knows the definition of Enterprise Value: Take Equity Value, add Debt and Preferred Stock (and others), and subtract Cash... But WHY do you do any of that? Enterprise Value represents the value of the company's CORE BUSINESS OPERATIONS to ALL THE INVESTORS in the company - equity, debt, preferred stock, etc. So focus on OPERATIONAL ITEMS and ALL INVESTORS when thinking about what to include... and what to exclude! Table of Contents: 1:19 What Enterprise Value Means 2:10 The 3 Key Rules of Thumb 5:15 Walk-Through of Vivendi's Assets and What to Subtract 11:08 How to Determine the Proper Treatment for Certain Assets 12:33 Excel Calculations for Assets Subtracted 13:30 Walk-Through of Vivendi's Liabilities & Equity and What to Add 15:14 How to Determine the Proper Treatment for Certain Liabilities 17:04 Excel Calculations for Liabilities Added 18:57 The Equity Section and Noncontrolling Interests 19:45 Recap and Summary The Three Rules of Thumb: 1. Is this item a *long-term funding source* for the company? In other words, will the funds we raise from this item help fund our business for years to come? If so, you should ADD this item when calculating Enterprise Value! Examples: Debt, Preferred Stock, Noncontrolling Interests (Minority Interests), Capital Leases, Unfunded Pension Obligations, Restructuring/Environmental Liabilities... 2. Will this item cost an acquirer of the company something extra when they go to buy it? And is it NOT something that will be repaid out of the company's normal operating cash flows (e.g., Accounts Payable)? If so, ADD it when calculating Enterprise Value! Examples: Debt, Preferred Stock. 3. Is this item NOT an operating asset? In other words, could the company continue to operate even WITHOUT this particular asset and be fine? If so, SUBTRACT it when calculating Enterprise Value! (These items often "save acquirers money" when buying the company.) Examples: Cash, Liquid Investments, Net Operating Losses, Assets from Discontinued Operations or Assets Held for Sale... How Does Each Item In Our Analysis Satisfy This Criteria? ITEMS THAT YOU SUBTRACT: Cash - Non-operating asset, the company doesn't "need" it to run its business beyond a certain low, minimum level. Liquid Investments - Also non-operating, the company has no need to invest in the stock market if it sells normal products/services. Equity Investments - Non-operating, not recorded in this company's revenue/expenses, doesn't "need" it to run the business. Other Non-Core Assets - Typically items that will be sold off or discontinued soon, so they're the very definition of "non-operating." NOLs - Also non-operating since long-term tax savings from these are not required to run the business. ITEMS THAT YOU ADD: Debt - Long-term funding source, and an acquirer has to repay it. Preferred Stock - Long-term funding source, and an acquirer has to repay it. Noncontrolling Interests - Long-term funding source, but this one's mostly for *comparability*... the company has recorded 100% of revenue and expenses from this company, so we want to capture 100% of its value as well (see our dedicated lesson on this one). Unfunded Pension Obligations - They're a long-term funding source! "Work for us now, we'll pay you a bit less, but we'll take care of you when you retire! Really!" To the company, very much like super-long-term debt.... but owed to employees, not outside investors. Plus, an acquirer has to pay for these somehow... Capital Leases - Also a long-term funding source, sort of like debt used to fund PP&E... these leases are used to fund operations and must be repaid. Restructuring & Legal Liabilities - Increases the cost to an acquirer, and they are also "long-term funding" of a sort - "Instead of paying for these expenses right now, we'll take care of them far into the future and reflect that liability." The Bottom-Line The Enterprise Value calculation is always somewhat subjective, and you'll see it done different ways. Everyone agrees on certain items (Cash, Debt, Preferred Stock), but the treatment of others varies by group, firm, industry, etc. As long as you can justify and explain how you calculated it, you'll be fine - even if someone else wants to change it later. To do that, keep in mind the 3 key rules of thumb above. Further Resources http://youtube-breakingintowallstreet-com.s3.amazonaws.com/106-07-VIV-Equity-Value-Enterprise-Value.xlsx http://youtube-breakingintowallstreet-com.s3.amazonaws.com/106-07-VIV-Annual-Financial-Statements-Notes.pdf
Views: 36207 Mergers & Inquisitions / Breaking Into Wall Street
Free cash flow (FCF) measures a company’s financial performance. It shows the cash that a company can produce after deducting the purchase of assets such as property, equipment, and other major investments from it’s operating cash flow. Click here to learn more about this topic: https://corporatefinanceinstitute.com/resources/knowledge/valuation/what-is-free-cash-flow-fcf/ Further information on Free Cash Flow: https://corporatefinanceinstitute.com/resources/knowledge/valuation/fcf-formula-free-cash-flow/
Views: 3607 Corporate Finance Institute
The Statement of Cash Flows is unmistakably the most difficult of the financial statements to prepare. With three sections, operating activities, investing activities, and financing activities, students often find the statement of cash flows to be a bit challenging to master. In financial accounting, students first have to assimilate to the idea of accrual accounting where revenues are recorded when earned and expenses are recorded when incurred (revenue recognition principle and matching principle). When students finally have this topic down they are asked to complete the statement of cash flows which only represents cash inflows and outflows (the opposite of accrual accounting). Therefore, instead of taking balances from the ledger accounts and placing them on a financial statement (i.e. balance sheet, income statement) we have to look at the changes in the account balances (i.e. change from beginning balance to ending balance). - see the rest of this blog entry at www.TheAccountingDr.com. -- Thank you all for your wonderful support. Because of your support we have been able to reach and help numerous accounting students. Please continue to be a part of our mission to help other accounting students be successful by giving our videos thumbs up, giving comments and adding our videos to your favorites. Subscribe: http://www.youtube.com/subscription_center?add_user=routhwsuedu Like me on Facebook and post your questions/topics of interest: http://www.facebook.com/TheAccountingDoctor -- For more accounting/how to eLectures (and accompanying lecture notes) similar to Statement of Cash Flows: Operating Activities Example video, blog, FAQs and accounting eBooks visit http://www.TheAccountingDr.com. Statement of Cash Flows: Operating Activities Example - Financial Accounting video: http://youtu.be/Kh1dLLKn4fU -- Please note that videos may require Flash media and may not play on devices without Flash capabilities (i.e. iPad). If you are having difficulty viewing this video on YouTube, these videos may also be viewed without Flash on my website at http://www.TheAccountingDr.com.
Views: 30200 Brian Routh TheAccountingDr
How to read a statement of cash flows? I think the best way to learn how to read a cash flow statement is to go through as many real-life examples as you can! I have done a previous video about the cash flow statement of oil and gas company Shell, and that of electric car company Tesla, both of which I recommend you to watch. Let me show you in this video another example of how a cash flow statement works, by reviewing the cash flow statement for Walmart (NYSE: WMT). I don’t own shares in Walmart, this video is purely for educational purposes. One of Walmart’s key objectives is a financial one: to deliver results and operate with discipline. In the “Walmart by the numbers” one page summary in the front of the annual report, a lot of emphasis is put on revenue performance (which is on the income statement, which I will talk about in an upcoming video), as well as on cash flow performance, more specifically the record operating cash flow and the 44th year of annual dividend increases to shareholders. This video will show you where and how you can get the picture of cash flow from Walmart’s financial statements. Walmart generated a very large cash flow from operating activities. Walmart returned much of that cash flow to shareholders through both share repurchases and dividends, while at the same time investing in the future of the business through CapEx and acquisitions. Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Views: 2987 The Finance Storyteller
NOW aims to help CFA candidates like you in your exam prep by explaining a difficult concept in a short video nugget. This week, we discuss from the reading on Understanding Cash Flow Statements: LOS 26a. Compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items. A company's cash flows can be classified as Cash from Operations (CFO), Cash from Investing (CFI), or Cash from Financing (CFF). How should the classification be done? You will learn the general principles in classifying cash flows, and the distinction between IFRS and US GAAP cash flow classification. ** This is an excerpt of the CFA Level 1 FRA Complete Mastery Course. Celebrate the launch by taking this course at just $9.99! Visit https://www.udemy.com/cfa-level-1-fra-complete-mastery-course/?couponCode=YOUTUBEFAN
Views: 154 PrepNuggets