Free cash flows, Strategic Management

Assignment Help:

Free cash flows can be arrived at by using the following calculation

Operating profit before interest and tax (PBIT)

+                                              Depreciation (if included in operating costs)

-                                              Capital expenditure (investment) on non-current assets

-                                              Taxation

=                                              Operating free cash flow

Free cash flow represents the cash flow which is available to be distributed to holders of both equity and debt. Dividends and interest payments would be ignored when calculating free cash-flow.  To establish a value for a company, free cash flow must be discounted using a cost of capital.

The value of a company or its shares will increase if

  • Free cash flows or dividends paid to shareholders increase
  • The cost of capital or cost of equity falls

The value of a company or its shares will decrease if

  • Free cash flows or dividends paid to shareholders decrease
  • The cost of capital or cost of equity rises

 


Related Discussions:- Free cash flows

Explain activity based management, Q. Explain Activity based management? ...

Q. Explain Activity based management? Activity based management (ABM) is about satisfying customers whilst making fewer demands on internal resources.  The aim is that once cos

Organisations strategic capabilities, Strategies of the organisation suppor...

Strategies of the organisation support in the business expansion and increase the revenue . Following are the strategic capabilities: Production: Open kitchen system is used by

Benefits of implementing an ebusiness strategy, Question: (a). What...

Question: (a). What are the benefits of implementing an eBusiness Strategy at Delta Airlines? (b). Identify the different virtual market places in the case study. (c

Create a pivot table, One rich seam of experimental data comes from meteoro...

One rich seam of experimental data comes from meteorological measurements.  Thousands of measurements are recorded each day by the Australian Bureau of Meteorology (BoM). This assi

Analyse link between corporate strategy and bottom line, Question 1: "S...

Question 1: "Strategic Corporate Social Responsibility executed well is effective Corporate Social Responsibility". What are the essential elements to take into account in o

Explain porter''s five forces analysis of the beer industry, Question 1: ...

Question 1: Mauritian sugar companies decide to go and invest in sugar cane farming and sugar production in an African country. What sort of study must they carry out on the co

Strategic Management Analysis Paper, Need to write a trend analysis paper f...

Need to write a trend analysis paper for a class. I have done first few parts of the project just need to write the last alaysis paper.

Jidoka - quality at source, Jidoka - Quality At Source Jidoka was firs...

Jidoka - Quality At Source Jidoka was first introduced by Dr Taichi Ohno into the Toyota Motor Company in the early 1960s. In the process of producing an efficient material fl

Cadbury dairy milk, Value proposition and product customer connect of cadbu...

Value proposition and product customer connect of cadbury dairy milk

Explain the importance of strategy development, Question 1: Custom Wine...

Question 1: Custom Wine Colorado Glasses of Leadville, Colorado, has just collected data from 75 defects from the day's production. a) As quality expert, you decide to con

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd