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