Chapter 2: Cash Flow

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

3 components of cash flow from assets

cash flow to creditors

a firm's interest payments to creditors less net new borrowing

Cash Flow to Bondholders

cash flow to creditors is sometimes called _____

Operating Cash Flow

cash generated from a firm's normal business activities

cash flow to stockholders

dividends paid out by a firm less net new equity raised

Change in Net Working Capital

it is measured as the change in net working capital over the period being examined and represents the new increase or decree in current assets over current liabilities

Operating Cash Flow

it tells us whether or not a firm's cash inflows from its business operations are sufficient to cover its everyday cash outflows

Operating Cash Flow

refers to the cash flow that results from the firm's day-to-day activities of producing and selling

capital spending

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

cash flows to creditors and stockholders

represent the net payments to creditors and owners during the year

cash flow from assets

the total of cash flow to creditors and cash flow to stockholders

Change in Net Working Capital

amount spent on net working capital

Free Cash Flow

another name for cash flow from assets