Cash flow Essay Samples and Topic Ideas
cash flow. It is important to note that the similarity between NPV and PI stop at their capacity to present the future cash flow of an investment. That is because the NPV offers the currency difference for the investment such that a positive value is acceptable while the PI offers the ratio such that a value any value greater than one acceptable. It is additionally important to note that a positive NPV is matched by a PI value that is greater than one thereby resulting in an identical decision on whether to reject or accept the investment. This rule does not hold true for mutually exclusive situations where the investment scales differ such that a positive NPV value would still be matched by a PI...
- Words: 275
- Pages: 1
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cash flow to meet the company’s immediate financial needs. In addition, the value of current assets shows the company’s ability to be solvent by paying out dividends to shareholders and meet its financial obligations. Besides that, the value of the current assets is a reflection of the company’s creditworthiness since it shows that the company can generate cash for financing its activities without going into long-term debt. As such, it would be important for the company to maintain its current assets so as to aid in predict the probability, timing and amount of future cash flows thereby acting as a reflection of financial flexibility and liquidity. These three reasons would justify the decision...
- Words: 275
- Pages: 1
cash flow within the business and a reduction in per capital allowing the company to procure massive investments. Regarding an acquisition of a smaller company by a larger firm, following losses in the smaller business, the acquiring firm is in a position to minimize its taxes by using the net-operating losses of their merging partner. Consequently, through the union, the company can accumulate its deflation tariff-reducing the taxes. A plausible advantage of entering a merger, in particular for a smaller business facing operation difficulties, is the ability to overcome such challenges and continue to profit through owing of shares. Economic recessions in the US threaten the existence of smaller...
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cash flow challenges. Since the company has maintained a healthy bank statement, it would be easy to request to request for an overdraft of two to three months at a relatively low-interest rate. The other option would be to go for a short term inventory loan with the working capital as collateral. The firm can also review its credit terms as trade credit acts as a risk sharing mechanism (Yang and Birge (2013). A 2/10 net 30 trade discount reduces accounts receivable cycles. The cost of foregoing it is thus the cost of tied up cash for the firm due to longer than preferred receivable cycles and unsatisfied customers that would miss out on the 2% discount. The impact of the opportunity cost is thus...
- Words: 275
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Cash flow Starbuck deals with mainly coffee sales, marketing, and packaging. The company buys raw coffee from farmers, process it and package it. It also has restaurants where customers enjoy readymade coffee. Starbucks relies heavily on leases since it does not operate on its own premises. The operating leases have seen the company have off-balance sheet operations as it strives to cater for the rent expenses. This has been the major financial issue that threatens Starbuck’s cash flow. Certain financial ratios need to be considered to determine the company’s capability of handling a loan. Firstly, the fixed charge coverage ratio which shows if the company has the capability of paying for its...
- Words: 275
- Pages: 1
cash flow alongside maintaining a sound balance sheet. Although Apple’s stock has been performing relatively well, it has recorded what may seem as its worst showing in recent times. In 2015, the value of the stock was at nearly $133 which it later fell to $92 then on the rise again to $124 after which a downward trend towards $90 per share is on track. Heading into the future, what investors are worried about is whether to buy, sell, or hold their stock. Apple’s iPhone sales have dropped from $70 million to $54 million in the same financial quarter as that of 2015 as shown in Appendix A. This fall in earnings has shown a slowdown which has led to a panic over the future of the company by its...
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cash flow provides Macdonald with a strong credit rating a factor that creates flexibility in funding the capital expenditure and returning of cash to the shareholders. Through effective evaluation in 2015, the Company management decided to come up with a plan of optimizing capital structure and rising the cash return to the shareholders with the aim of targeting more than $30 billion for the next three year period. This move also enabled the Company to cost effectively able to access capital globally and at the same time ensuring the company has continued investment. This decision from the board of directors enabled the company to raise its dividends in 2015 reflecting management confidence in...
- Words: 1100
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cash flow. For example, the hotel can sell furniture and other unnecessary tangible properties. The hotel has a negative loan interest cover, meaning that the ability to pay interest obligations is tiny. At -0.4, the hotel has a higher debt burden, and thus, the possibility of bankruptcy is very high. As a means to Improve interest cover; the hotel should set short-terms for accounts receivable where necessary. Besides, the hotel should limit pre-paying expenses to keep funds in its accounts for as long as possible. The operating profit for the food and beverages is -47.39%. These means that this section is not doing well financially. Since the foods and beverages department constitutes a significant...
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cash flow from quarter to quarter. Expenses for the project are indicated below: Rent 0 Legal 0 Brochures 0 Insurance 0 Consultation 0 Stationery 0 It is, therefore, true that the investment will be worthwhile and be able to provide stable amounts which will be used by the investor during the period the investment will be active. With $0 expenses, the investor will be in a position to follow after their money properly since the amounts will be similar through all the quarterlies. The investor will also have an opportunity to make changes to their investment if they wish, and this can be done with the total amount of money that will have been earned as profits. Buying shares with the money will not...