How is the value of an asset determined by predicted future cash flows?

Q: How do you calculate Fixed Asset Turnover? What is the Free Cash Flow Ratio? What is the difference…

A: The answers for the questions on accounting ratios are discussed hereunder : Fixed Assets turn over…

Q: Identify the cash flow series associated with production or service over thelife of the asset?

A: Definition: Cash inflows: The amount of cash received by a company from the operating, investing,…

Q: what is the projected cash flow statement?

A: Cash flow statement: The cash flow statement shows only inflows and outflows of cash. It does not…

Q: What about time flows and cash Value money?

A: Money has time value. A rupee today is more valuable than a rupee a year hence. Why? There are…

Q: how changes in Working Capital affect Cashflow?

A: Working capital or net working capital is equals to firm’s current assets minus current liabilities,…

Q: What factors affect the interest rate used to discount the cash flow expected from a financial asset

A: the interest rate that is used to discount the cashflow expected from a financial asset is nothing…

Q: Describe the procedure of Estimating Risky Cash Flows?

A: Risky cash flow means the future cash flow which falls short of the expectations. This shortage may…

Q: How do you evaluate an asset whose value is predicated on future cash flows?

A: Assets are the resources that are generally used for the purpose of revenue generation by the…

Q: Which is more important from a finance perspective-net income or operating cash flow? What is the…

A: Net income is calculated in the income statement whereas and operating cash flows are calculated in…

Q: What is the present value of the combined cash flows?

A: Present Value: It represents the present value of the future cash flow stream.  It is computed by…

Q: What is the maturity period required for an investment to qualify under the definitions of a cash…

A: Cash and cash equivalents correspond to just the line item on the balance sheet that lists the value…

Q: Finding the present value of future cash flows is called O A. analytics, tracking and finding the…

A: Capital Budgeting: It is a process a company undertakes for the evaluation of potential investments…

Q: Where is the short term investment shown in the Cash flow statement?

A: A short-term investment: It also known as a temporary investment or marketable security. It is a…

Q: Probability of achieving cash flows Distribution of hedged cash flows

A: If the cash flow are hedged than there are more chances of achieving the cash flow and if not hedged…

Q: What are the interest formulas for single cash flows?

A: Present Value: The value of today’s amount to be paid or received in the future at a compound…

Q: Terminal value refers to the sum of all the net cash flows from an investment from the beginning to…

A: Given Statement, Terminal value refers to the sum of all the net cash flows from an investment from…

Q: cash flows versus net income.Which should we use in present value calculations and why?

A: Definition: NPV is the difference between present value of cash flow and present value of cash…

Q: Describe the annual cash flow analysis, which presents measures of investment worth based on yield?

A: The question is based on the concept of cash flow and its analysis in terms of discounted value of…

Q: About cash flows versus net income. Which should we use in present value calculations and why?

A: Net present value is the value of an investment in today’s worth. It is a capital budgeting…

Q: What is the significance of the FCF (Free Cash Flow) in the area of valuation?

A: Cash flows refer to the cash expenditure and cash receipt of the business over a specific time…

Q: statements are true of long-term investments? They can be considered cash equivalents.

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: On what does the interest paid on a cash investment depend?

A: Cash investment An investment (short-term) under which one makes a deposit the cash and also…

Q: Find the present and future value of the cash flows shown in the figure

A: Present value is the current worth of the annuity at a given interest rate.…

Q: Cash Payback Period, Net Present Value Method,

A: Capital budgeting is an important tool for making decisions. It is used when a company opts for…

Q: Explain the significance of time value of money in financial valuation?

A: Time value of money means the value of a sum of money in future is not the same as the value of…

Q: What is discounting and why do we discount future cash flows?

A: A cash flow statement is a financial statement that shows how much cash and cash equivalents are…

Q: Define the positive cash flows?

A: The positive cash flow is the state of the organization wherein money inflows to an enterprise over…

Q: Describe the process of estimating Risky Cash Flows?

A: Process of estimating Risky Cash flows.

Q: When an asset or liability is initially recorded, what determines its amount? The Replacement cost…

A: When an asset or liability is initially recorded, it is recorded at its cost of acquisition.

Q: What is incremental cash flow?

A: Cash flow is the movement of cash in the company. While making an investment in any project, cash…

Q: PRESENT VALUE FORMULA Please provide the formula for finding the Present Value of money and explain…

A: Definition:   Time value of money: Time value of money refers to the concept that the value of money…

Q: How is valuation of any financial asset related to future cash flows?

A: Valuation of a financial asset=Present value of expected future cash flows

Q: What is the operating cash flow? The capital spending? The change is net working capital? The cash…

A: Capital spending is termed as the amount spent by the firm in the year to purchase or maintain the…

Q: Explain cash inflows from capital investments.

A: Cash inflows from Investing activities Sale or purchase of company's long term assets like fixed…

Q: Value in use is a) © Discount rate b) © Present value of future cash if flows c) © Uncertainty of…

A: The monetary value of an asset or liability is referred to as its value. The most accurate…

Q: Speculative Balance refers to holding of cash for future investment opportunities.

A: Speculative balance is the method used by the investors of holding money for making future…

Q: The present value of an investment's future cash flows divided by its initial cost is the: O Net…

A: The present value of an investment is calculated by applying the time value of money concept to the…

Q: Describe the Probabilistic Cash Flow Analysis?

A: Answer: Cash flow applies to the overall sum of cash and cash equivalents that come into and out of…

Q: . How does one determine the value of any assetwhose value is based on expected future cash flows?

A: If there is an order of anticipated upcoming cash flows, cash flow technique is one of the finest…

Q: Define the term Equivalent Cash Value?

A: Cash: Cash is the money that is readily available in the form of currency. Since cash can be easily…

Q: Which is more important from a finance perspective - net income or operating cash flow? Why? What is…

A:

Q: Does the value of any asset depends on the cash flows producedby the asset? Why?

A: Asset valuation involves the determination, using book values, of a fair market, or the present…

Q: What is the estimated worth today of an amount of cash to be received (or paid) in the future…

A: When the amount to be paid or received in future is discounted to find its worth today, this is…

Q: How is the value of any asset whose value is based on expected future cash flows determined?

A: Answer: When there is a sequence of expected future cash flows, cash flow method is one of the best…

Q: future worth for the above cash flow

A: Future value is the compounding of present value of cash flow at the required rate

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.