Caladonia Products Integrative Problem

In order to assess Calaveras’ value, I calculated the free cash flow from 1994 to 1998. The free cash flow from each year derived from adding Earnings before Interest and Taxes,

* On Income Statement for December 31, 2011, the number of Revenues, Cost of Goods Sold, Expenses and Net Income will go

year 1 net income would do). Then, its year 2 opening net assets are $276.36,

First, using the projected EBIT forecasted income statement; we took out the 37% tax, change in working capital, and CAPEX for 1994-1998 and added back the depreciation and amortization expenses to arrive at free cash flows. We

* Net Operating Income (NOI), Cash Flow from Operations (CFO) and Cash Flow after Financing (CFAF)

According to the case study, "Managing Costs and Revenues at Happy Town Neurology," in order to receive a promotion an individual must demonstrate the ability to plan, organize and direct the functional structure within that department. The neurology clinic offers its employees opportunities for assistant to the chief financial officer who has been with the company for in this case is interested in a position asked by the CFO to produce a cash flow budget and a report that is needed to acquire a loan for the hospital. In order, for the assistant to accomplish the goal assigned; she will need assistant from the controller. The controller is the chief accounting officer who manages the finance department and generates portfolios that are essential for capital fund acquisition (Buchbinder & Shanks, 2012). Moreover, the controller manages the accounting function and performance, which includes navigating the third party risk-based model procedure.

Return on net assets = Net Income in Statement of Operations / Net Assets in the Balance Sheet

There are payments for material, selling and administrative expenses, tax expenses and interest expenses. In this case, Genesis energy did not have any dividends payment and that lowered their cash outflows. In this situation, cash outflows was changing very frequently, but definitely in the second year the number of cash outflows was higher than in the first year. Finally, we were able to calculate net cash gain or loss by subtracting cash inflow from cash outflow. I there was a gain if the cash inflows were higher than cash outflows and there was a loss if it was opposite. In the cash flow summary we started off with cash balance start of the month which was $10,000 and then added on the net cash gain. The total balance was called cash balance at the end of the month. It was told to us that there is a minimum cash balance desired which was $25,000 and the rest of the money was either surplus or deficit. If we had more money in the total balance than $25,000, the rest of the money would be surplus. If we would have less money in the total balance than $25,000. That would be called deficit. So in the case, that we had surplus, we would not need any external finance requirement, but if we would have deficit we would need it. Over the course of 2 years, deficit happened three times which lead to the external

NewGrade’s current free cash flows may be determined by obtaining information about the firm’s earnings before interest and taxes (EBIT) minus the change in net working capital minus capital expenditures (Keen, n.d.). This information is provided in Exhibit 5 for the years 2008 through 2025. For example, in 2008, the EBITDA is $180.9 million. Deducting the capital expenditures of $6 million and an arbitrary change in net working capital, which we will use as $18.84 million, the company’s free cash flow for 2008 is $156.06 ($180.9 million - $6 million - $18.84 million).

The asset will generate end-of-year cash flows of $100/year for the first two years. With the interest rate 10%/year, the present value of the firm’s future cash flow is $173.55, which is known as the capital asset and shareholder’s equity.

Free Cash Flow= EBIT – taxes + depreciation – change in NWC – capital exp

The final section of the statement of cash flows is the financing section, which shows the dividends paid, the purchases of stock, the net borrowings, and other possible cash flows from financing activities. A positive trend for investors is the fact that dividends paid has increased (even though it is negative to the firm) as well as sale purchase of stock, from 2009 to 2011 and even increased quarterly in 2011. The net borrowings is off an on from 2009 to 2011 possibly because of certain funds needed in particular years. In 2009, it was $5,746,000,000 and in 2010, it was $190,000,000. It shot back up again in 2011, with $5,960,000,000.

Of all the topics in this course, many students find Lesson 4 to be the most frustrating. I think this may be due in part to an apparent contradiction: there are lots of numbers and equations to work with, but surprisingly little certainty in our conclusions. I share your frustrations at times. Fortunately, these cases are the only “strictly financial” case studies … the only ones where number crunching is an end unto itself. However, basic financial analysis will always be an important part of our toolkit for making pricing decisions.

| Below is an excerpt from the cash flow statement of a firm for fiscal year 2003: Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of software Tax benefits of employee stock plans Special charges (Gains)/losses on investments Change in operating assets and liabilities: Receivables Inventories Pension assets Other assets Accounts payable Pension liabilities Other liabilities Net cash provided by operating activities Cash flows from investing activities: Payments for plant and other property Proceeds from disposition of plant and other property Investment in software

It is expressed in time or years. It is normally defined as the period, usually expressed in years, which it takes the cash inflows from an investment project to equal the cast outflows.