Cash Flow Explained | Key to Business Value

Introduction to Commercial Real Estate Investing Part 3: Valuing Commercial Property

Introduction What most distinguishes an investment asset from a speculative asset is the comparison of price vs. appraised value. To an investor, the comparison of price and value is the most important consideration. It is only fitting, then, that I devote a post in this series to the valuation of commercial property. Before I go

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Free Cash Flow

Investing Glossary

Free cash flow is the amount of operating cash flow which remains after subtracting capital expenditures. Free cash flow is a measure of a company’s residual cash profits. However, free cash flow differs from profit on the income statement in several respects. First, free cash flow incorporates the cash flow effects of increases in operating

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Direct Method Cash Flow Statement

Investing Glossary

The direct method cash flow statement presents operating cash flows from the “top down”, according to the sources and uses of cash. In contrast, the indirect method starts with net income and adds or subtracts changes in working capital accounts until net income is reconciled with operating cash flow. Typical cash flow sources presented on

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Indirect Method Cash Flow Statement

Investing Glossary

Under the indirect method cash flow statement, operating cash flow is calculated by reconciling net income to cash flow. The reconciliation involves (a) adding back to net income any noncash expenses, such as depreciation and amortization, and (b) adding or subtracting changes in operating working capital accounts on the balance sheet. An increase in a

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Cash Flow from Investing Activities

Investing Glossary

Cash flow from investing activities, also called investing cash flow, refers to the net difference between cash sources and cash uses related to a firm’s investing activities. Cash flow from investing activities is one of three sections of the cash flow statement. The other sections of the cash flow statement are cash flow from operating

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Cash Flow from Financing Activities

Investing Glossary

Cash flow from financing activities, also called financing cash flow, is the net cash flow associated with payments made from and to the firm’s capital providers. Cash flow from financing activities is one of three sections in the cash flow statement, the other two being cash flow from operating activities and cash flow from investing

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Cash Equivalents

Investing Glossary

Cash equivalents are financial securities which can be sold quickly and without impairment in value. Common cash equivalent securities include U.S. Treasury bills and commercial paper. For accounting purposes, cash (bank balances and petty cash) and cash equivalents are lumped together into a single account on the balance sheet. This account is usually called cash

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Cash Flow from Operations

Investing Glossary

Cash flow from operations, also called operating cash flow, refers to the difference between cash received from operating sources and cash disbursed for inventory and operating expenses. Cash flow from operations is one of three sections on a firm’s cash flow statement. The other two sections are cash flow from financing activities and cash flow

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Capital Expenditures

Investing Glossary

Capital expenditures (“capex”) are investments made to acquire or enhance the value of long-term productive assets. Capital expenditures are not expensed on the income statement. Rather, capital expenditures are “capitalized” into the asset section of the balance sheet. Capital expenditures also appear within the cash flow statement under the cash flow from investing section. Capital

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Cash Flow Statement

Investing Glossary

The cash flow statement is a financial statement which presents the company’s cash receipts and disbursements over a stated period. The net cash flow corresponds to the change in the cash balance on the balance sheet over the period. The cash flow statement has three sections: cash flow from operating activities, cash flow from investing

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Cash Flow

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Start Here.