Cash flow Essay Samples and Topic Ideas
cash flow ratio is liquidity ratio that measures the company’s ability to pay both the short-term and the long-term obligations. The values assess the degree to which the company’s resources (current assets) can meet its short-term obligations (current liabilities). The rule of thumb state that “the more the company’s current ratio, the more liquid the company is and hence ability to service it's short-term obligation.” Similarly, analysis of the three Amusement park investments shows that six flag is the most liquid, followed by Cedar and lastly Sea World Entertainment. Return on Equity (ROE) ROE represent a percentage of shareholders equity returned as income. It is a measure of business...
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Cash flow The concept of cash flows, as the term denotes, involves the movement of money in both directions of product development. This means that the manufacturer is moving funds from the consumer towards the company as well as from the company to the suppliers. Success running of a business depends on the level with which a company can minimize cash flows towards the raw materials vendor and increase cash flows from the clients. This is a critical aspect of balance. The value that a customer is willing to pay for a product is tied to the perceived quality of the product. (Sweeney, 2002) To achieve substantial quality, a manufacturer must be prepared to utilize the considerable resource in...
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cash flows. The diagram below shows Ford Motor valuation for the past five years. Figure 1: Ford Motors valuation Economic value added (EVA) EVA is based on the concept of economic profit maximization. It is, therefore, the difference between revenues and economic costs (book costs +opportunity costs). EVA adjusts capital and income to the computation of residual income (Shil, 2009, 169). The economic profit will thus be higher than normal costs in order for there to be an economic profit. EVA= NOPAT-C*WACC where NOPAT-Net Operating Profit after Tax, C- Long term capital, WACC- Weighted Average Cost of Capital. The NOPAT = EBIT (1-t) C= Fixed Assets + Net working capital (current assets-...
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cash flow outside firm. There is the utilization of peer-reviewed articles on 3M Company in a bid to get much insight into the financial stands. In an attempt to understand the position of the 3M Company in matters of finance, it is essential to consider key aspects of the cash flow. In the last quarter, there has been an operating income margin of 24.7 %. This figure presents a 0.4 percentage up the previous year. It is essential to note that the margins get the contribution from each of the different business groups in the 3M company, with each posting not less than 22% margin. These margins emanate from the increasing cash flow. There has been a cash flow increase of 19%. When there is an...
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cash flows from the project. The value of money over the project life is an important consideration in evaluating this project. NPV has been considered to be the essential formula for evaluating a project. It takes into account the change in the value of money in respect to a change in time as well as the change in investor wealth over the project life. The inputs to NPV comprise of the rate of return and project cash flows. The project has uneven cash flows. Calculation of NPV Year cash flow -25,000 10,000 10,000 10,000 10,000 10,000 15,000 15,000 Salvage value=50000 Rate of return =14% Computation of PV and NPV The cash flows are uneven and therefore: YEAR 1 2 3 4 5 6 7 Net cash flow 10000 10000...
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cash flows leading to low reserves. They thus turn to the Federal Reserve for a loan so as to increase their reserve and cash flow. To ensure that commercial banks can carry on their business the FED offers to commercial banks discounted rate loans. Hence the interest on the loan forwarded to the commercial bank is called the Federal Reserve discount rate. When this rate is low, it gives banks an incentive to source for funding from the FED. This increases the banks’ reserve, cash flow, and money supply. The banks have money to give out as loans and to invest and in doing so generate more and more leading to an increase in cash flow. This lowering of federal discount rate can be termed as...
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cash flow to the organization. 4-Production department at Al Foah Dates Company The department is useful in researching about the competitive product features, designing the products and ensuring that the dates and other products from the company meets the requirements of both the local market and the export market. Some of the products lines that they have developed for the company sales include the Plain date’s category that contains products like Jabri, Lulu, and Maktoomi among many others. Other product lines include dates with nuts, Date syrups, and Paste dates. The company has also been committed to producing quality products in other product categories like Dates with chocolate, Organic...
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cash flows, information, and raw materials as they move from supplier to manufacturer to wholesaler or retailer to the final consumer. Supply chain management involves consolidating the entire process to ensure that the firm runs smoothly. Supply chain management is divided into three categories. Financial flow. Deals with the cash flow either in or out of a concern. There is also the information block. This sector ensures that there is constant communication between the firm, its suppliers, and the market. Finally, there is the resource flow CITATION Joh11 l 1033 (Mangan & Lalwani, 2011). At this division material input and output is overseen. In this paper we are going to focus on two companies...
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cash flows are important functions of cash managements. The paper recommends a sweep account for the company to ensure that the company achieves the above functions. The first thing that the company should do is work on the Receivables and Inventories. It should do so to bring cash into the business as fast as possible. Some best practices to ensure this happens involves billing the clients promptly to enable the timely processing of payments to the firm. Additionally, a requirement for the clients to give an upfront deposit for every purchase is also a viable option to increase cash flow. Moreover, the company should consider giving discounts for early payments of the both receivables and inventory...
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cash flows generating from an investment equal or close to ‘zero.’ IRR is calculated using the same formula as the NPV. Taking 16% as the appropriate discount rate for both projects, we get the following IRRs- Project SQ (IRR) = $ 997.82 This is the closest to zero for project SQ at 16 percent discount rate. Any rate (even 16.1 percent) beyond that results in negative NPV values. Project HT (IRR) = - $ 21,463.36 At 16% discount rate, we get a negative NPV for project HT. But at 15.1% discount rate, this project’s NPV is $1,928.49 that is the closest value to zero. So, in terms of the IRR calculation above, Project SQ is the preferred option since it has a higher IRR. Profitability Index...
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