2.4 Cash Flow: Cash Flow from Assets

_________ is just money spent on fixed assets less money received from the sale of fixed assets

net capital spending

3 components of cash flow from assets

operating cash flow, capital spending, change in net working capital

The total cash flow from assets is given by _____ less _______ and ________

operating cash flow, net capital spending, change in net working capital

The financial definition of operating cash flow treats interest not as a(n) _____ but a(n) _______

operating expense, financing expense

Expenses associated with the firm's financing of its assets are not included because they are not _________

operating expenses

Operating cash flow tells us whether a firm's cash inflows from its business operations are sufficient to cover its everyday cash _____

outflows

The cash flow identity states that cash flow from the firm's assets is equal to the cash flow paid to ______ to the firm

suppliers of capital

The ____________ is given by operating cash flow less net capital spending and change in net working capital

total cash flow

The *change in net working capital* is often referred to as the _______ to NWC

addition

To determine the *change in net working capital*, take the difference between the ____and _________ figures.

beginning, ending net working capital

__________ refers to the net spending on fixed assets (purchases of fixed assets less sales of fixed assets)

capital spending

________ indicates the difference between the number of dollars that came in and the number that went out

cash flow

the total cash flow to creditors and cash flow to stockholders, consisting of the following: operating cash flow, capital spending, and change in the net working capital

cash flow from assets

cash flow identity

cash flow from assets = cash flow to creditors + cash flow to stockholders

Operating cash flow consists of revenue minus costs, but it doesn't include _____ because it's not a cash outflow and it doesn't include ____ because it's a financing expense. We do want to include _____ because these are paid in cash.

depreciation, interest, taxes

Operating cash flow does not include ____ and _____ but does include __

depreciation, interest, taxes

Net capital spending begins with _______, subtracts out _____, and adds back in ________

ending net fixed assets, beginning net fixed assets, depreciation

A ________ operating cash flow is often a sign of trouble.

negative

Net capital spending could be _______ if the firm sold off more assets than it purchased

negative

cash generated from a firm's normal business activities

operating cash flow

another name from cash flow from assets

free cash flow

Net capital spending is often called _____, which is an acronym for _____

CAPEX, capital expenditures

________ is measured as the net change in current assets relative to current liabilities for the period being examined and represents the amount spent on net working capital

change in net working capital