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Cash Flow Statement explained
 
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Cash flow statement tutorial. How does a cash flow statement work? How do cash balance and cash flow relate to each other? What is cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities? You will find all of these explained in this Finance Storyteller video, including an example of the cash flow statement for Shell (AMS: RDSA). The cash flow statement is one of the three main financial statements. As the cash flow statement explains how much cash has come in and gone out during a year, and what the sources and uses of this cash flow were, you could see the cash flow statement as an explanation of how the cash balance (one of the most important assets) has developed between two balance sheets. Cash is king. It is critical at every stage of a company’s lifecycle. When you open your own business, you need cash to get started. You will need cash to grow and expand. If a company runs out of cash to pay its bills, it’s game over. What you see in a cash flow statement should be a direct reflection of a company’s strategy. Is the company spending enough to build its unique and sustainable competitive advantage? Are customers willing to pay for the products and services that the company supplies? Is the company able to reward its investors for the risk they have taken, by paying a dividend? These and other questions can be answered by analyzing a cash flow statement. It’s nice to have the total numbers of the cash balance as well as the total net cash flow, but it doesn’t tell us much yet about what goes on inside the company. To get a more meaningful look, we have to drill a level deeper into cash flow. That’s why a cash flow statement is split into three sections. The first section will have the word “Operating” in it, the second “Investing”, the third “Financing”. Many companies will call the first section “Cash From Operating Activities” or CFOA, or a variation on that wording like “Cash Flow From Operations”. Cash From Operating Activities is roughly the cash inflow from customers paying the company minus the cash outflow of the company paying for purchases from suppliers, minus the cash outflow of salaries paid to employees, and minus the cash outflow of taxes paid to governments. For most mature companies in good health, the cash flow from operating activities is a net cash inflow. The second section is often called “Cash From Investing Activities”, or a variation on that wording. This is where Capital Expenditures (a cash outflow), acquisitions (a cash outflow) and divestments (a cash inflow) are recorded. Cash From Investing Activities tends to be a net cash outflow for most companies in most years. The third section is often called “Cash From Financing Activities”, or a variation on that wording. This one can go either way: a net cash inflow or a net cash outflow. Does the company need money and attract new debt to finance itself? Then there will be a cash inflow. Does the company have a lot of cash on its balance sheet and no plans to put that cash to any productive use? Then the company might be paying a dividend to shareholders, which is a cash outflow. If you are interested in a more in-depth look at the similarities between two very capital-intensive industries (oil and telecom), please check the blog article on my website: http://www.devroe.org/?p=80 Understanding cash flow is a key element of “getting the picture” of a company. As an investor, analyst, employee or supplier, it is advisable to understand both the actual numbers of past years, as well as the intent going forward. Related videos: Cash flow statement analysis Tesla 2016 through 2018 https://www.youtube.com/watch?v=49TxnoP4u8Y Free Cash Flow explained simply and with examples https://www.youtube.com/watch?v=gl3OLtEX2PM Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
#1 Cash Flow Statement ~ Introduction and Basic Concept
 
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Described concept and procedure to prepare a Cash Flow Statement as per Accounting Standard-3 Students may also watch following lectures : 1. Cash Flow Statement (Treatment of Tax & Dividend) : https://www.youtube.com/watch?v=q-KZ-INDHNs 2. Concept behind formation of a Formula (Ratio Analysis) : https://www.youtube.com/watch?v=76gMXQBnbps 3. Balance Sheet of a Company : https://www.youtube.com/watch?v=IuExxeB4XNk Connect on Facebook : https://www.facebook.com/ca.naresh.aggarwal Download Assignments: https://drive.google.com/drive/folders/0BzfDYffb228JNW9WdVJyQlQ2eHc?usp=sharing #CashFlowStatement #Accounting
Views: 447342 CA. Naresh Aggarwal
Cash Flows for a Financial Analysis
 
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This video is a part of Conservation Strategy Fund's collection of environmental economic lessons and was made possible thanks to the support of the Gordon and Betty Moore Foundation and the Marcia Brady Tucker Foundation. This series is for individuals who want to learn - or review - the basic economics of conservation. In this video, you will learn how to use a spreadsheet for conducting the net present value of a financial cost-benefit analysis. To follow this series, subscribe to our YouTube channel. For more information on these and other trainings from Conservation Strategy Fund, check out: http://www.conservation-strategy.org/ For copyright information on all sound effects, see http://www.conservation-strategy.org/en/page/csf-economic-video-lessons-sound-references
Cash Flow Estimation Part 1
 
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Cash Flow Estimation Financial Management Lecture by Arif Irfanullah www.arifirfanullah.com
Views: 30881 IFT
Cash Flow Computation in Capital Budgeting
 
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FINANCIAL MANAGEMENT – A COMPLETE STUDY If you enjoyed this content make sure to check the full course. Click on the following link to avail discount (only for Rs 640). https://www.udemy.com/financial-management-a-complete-study/?couponCode=YTB10A Indepth Analysis through 300+ lectures and case studies for CA / CFA / CPA / CMA / MBA Finance Exams and Professionals ------------------------------------------------------------------------------------------------------------------------ Welcome to one of the comprehensive ever course on Financial Management – relevant for any one aspiring to understand Financial Management and useful for students pursing courses like CA / CMA / CS / CFA / CPA, etc. A Course with close to 300 lectures explaining each and every concept in Financial Management followed by Solved Case Studies (Video), Conversational Style Articles explaining the concepts, Hand outs for download, Quizzes and what not?? ------------------------------------------------------------------------------------------------------------------------ This course is about Financial Management. By taking up this course, you will have opportunity to learn the all facets of Financial Management. Knowledge on Financial Management is important for every Entrepreneur and Finance Managers. Ignorance in Financial Management can be disastrous because it would invite serious trouble for the very functioning of the organisation. This is a comprehensive course, covering each and every topic in detail. In this course,you will learn the Financial Management basic concepts, theories, and techniques which deals with conceptual frame work. Following topics will be covered in this course a) Introduction to Financial Management (covering role of CFO, difference between Financial Management, Accounting and other disciplines) b) Time Value of Money c) Financial Analysis through Ratios (covering ratios for performance evaluation and financial health, application of ratio analysis in decision making). d) Financial Analysis through Cash Flow Statement e) Financial Analysis through Fund Flow Statement f) Cost of Capital of Business (Weighted Average Cost of Capital and Marginal Cost of Capital) g) Capital Structuring Decisions (Capital Structuring Patterns, Designing optimum capital structure, Capital Structure Theories). h) Leverage Analysis (Operating Leverage, Financial Leverage and Combined Leverage) I) Various Sources of Finance j) Capital Budgeting Decisions (Payback, ARR, MPV, IRR, MIRR) k) Working Capital Management (Working Capital Cycle, Cash Cost, Budgetary Control, Inventory Management, Receivables Management, Payables Management, Treasury Management) This course is structured in self learning style. It will have good number of video lectures covering all the above topics discussed. Simple English used for presentation. Take this course to understand Financial Management comprehensively. Mandatory Disclosure regarding course contents: This course is basically a bundle of following courses: a) Time Value of Money b) Cash Flow Statement Analysis c) Fund Flow Statement Analysis d) Finance Management Ratio Analysis e) Learn how to find cost of funds f) Learn Capital Structuring g) Learn NPV and IRR Techniques h) Working Capital Management. If you are purchasing this course, make sure you don't purchase the above courses. Also note, this course is also bundled in comprehensive course named Accounting, Finance and Banking - A Comprehensive Study. So if you are purchasing above course, make sure you don't purchase this course. • Category: Business What's in the Course? 1. Over 346 lectures and 48 hours of content! 2. Understand Basics of Financial Management 3. Understand Importance of Time Value of Money 4. Understand Financial Ratio Analysis 5. Understand Cash Flow Analysis 6. Understand Fund Flow Analysis 7. Understand Cost of Capital 8. Understand Capital Structuring 9. Understand Capital Budgeting Process 10. Understand Working Capital Management 11. Understand Various sources of Finance Course Requirements: 1. Students can approach with fresh mind Who Should Attend? 1. Any one who wants to learn Financial Management comprehensively 2. MBA (Finance) students 3. CA / CMA / CS / CFA / CPA / CIMA
Views: 4274 CARAJACLASSES
Understanding Cash Flow
 
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http://www.MDTSeminar.com Cash flow is the net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's liquid assets are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders, pay expenses and provide a buffer against future financial challenges. Negative cash flow indicates that a company's liquid assets are decreasing. Net cash flow is distinguished from net income, which includes accounts receivable and other items for which payment has not actually been received. Cash flow is used to assess the quality of a company's income, that is, how liquid it is, which can indicate whether the company is positioned to remain solvent. Often called the "statement of cash flows," the cash flow statement indicates whether a company's income is languishing in the form of IOUs – not a sustainable situation in the long term – or is translating into cash flow. Even very profitable companies, as measured by their net incomes, can become insolvent if they do not have the cash and cash-equivalents to settle short-term liabilities. If a company's profit is tied up in accounts receivable, prepaid expenses and inventory, it may not have the liquidity to survive a downturn in its business or a lawsuit. Cash flow determines the quality of a company's income; if net cash flow is less than net income, that could be a cause for concern. Cash flow statements are divided into three categories: operating cash flow, investing cash flow and financing cash flow. Operating cash flows are those related to a company's operations, that is, its day-to-day business. Investing cash flows relate to its investments in businesses through acquisition; in long-term assets, such as towers for a telecom provider; and in securities. Financing cash flows relate to a company's investors and creditors: dividends paid to stockholders would be recorded here, as would cash proceeds from issuing bonds.
Excel Finance Class 87: Cost Savings Example Estimating Cash Flows For NPV calculation
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Example of estimating Cash Flows For Net Present Value and Internal Rate of Return calculations for Asset Valuation For a "Cost Savings Project".
Views: 8636 ExcelIsFun
Free Cash Flow
 
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This video defines free cash flow, provides an equation for calculating free cash flow, and illustrates the equation with an example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 121485 Edspira
Depreciation in cash flow | Finance & Capital Markets | Khan Academy
 
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Depreciation in Cash Flow. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/accounting-and-financial-stateme/depreciation-amortization-tut/v/amortization-and-depreciation?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/accounting-and-financial-stateme/depreciation-amortization-tut/v/depreciating-the-truck?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: How do you account for things that get "used up" or a cost that should be spread over time. This tutorial has your answer. Depreciation and amortization might sound fancy, but you'll hopefully find them to be quite understandable. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 164500 Khan Academy
How to Create a Cash Flow Forecast using Microsoft Excel - Basic Cashflow Forecast
 
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Create a basic cash flow forecast using excel. If you need help get in contact. www.bpfs-online.com Support this channel https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=FHGCUQ8GU9VB6 Take our Online Sage training course http://www.bpfs-online.com/p/online-sage-training-course.html Create a bookkeeping spreadsheet using Microsoft Excel http://youtu.be/LlWADbkGdac Sage Accounts Bookkeeping Tutorial/Training Learn more at www.bpfs-online.com
Views: 630620 BookkeepingMaster
WACC, Cost of Equity, and Cost of Debt in a DCF
 
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In this WACC and Cost of Equity tutorial, you'll learn how changes to assumptions in a DCF impact variables like the Cost of Equity, Cost of Debt. By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" You'll also learn about WACC (Weighted Average Cost of Capital) - and why it is not always so straightforward to answer these questions in interviews. Table of Contents: 2:22 Why Everything is Interrelated 4:22 Summary of Factors That Impact a DCF 6:37 Changes to Debt Percentages in the Capital Structure 11:38 The Risk-Free Rate, Equity Risk Premium, and Beta 12:49 The Tax Rate 14:55 Recap and Summary Why Do WACC, the Cost of Equity, and the Cost of Debt Matter? This is a VERY common interview question: "If a company goes from 10% debt to 30% debt, does its WACC increase or decrease?" "What if the Risk-Free Rate changes? How is everything else impacted?" "What if the company is bigger / smaller?" Plus, you need to use these concepts on the job all the time when valuing companies… these "costs" represent your opportunity cost from investing in a specific company, and you use them to evaluate that company's cash flows and determine how much the company is worth to you. EX: If you can get a 10% yield by investing in other, similar companies in this market, you'd evaluate this company's cash flows against that 10% "discount rate"… …and if this company's debt, tax rate, or overall size changes, you better know how the discount rate also changes! It could easily change the company's value to you, the investor. The Most Important Concept… Everything is interrelated - in other words, more debt will impact BOTH the equity AND the debt investors! Why? Because additional leverage makes the company riskier for everyone involved. The chance of bankruptcy is higher, so the "cost" even to the equity investors increases. AND: Other variables like the Risk-Free Rate will end up impacting everything, including Cost of Equity and Cost of Debt, because both of them are tied to overall interest rates on "safe" government bonds. Tricky: Some changes only make an impact when a company actually has debt (changes to the tax rate), and you can't always predict how the value derived from a DCF will change in response to this. Changes to the DCF Analysis and the Impact on Cost of Equity, Cost of Debt, WACC, and Implied Value: Smaller Company: Cost of Debt, Equity, and WACC are all higher. Bigger Company: Cost of Debt, Equity, and WACC are all lower. * Assuming the same capital structure percentages - if the capital structure is NOT the same, this could go either way. Emerging Market: Cost of Debt, Equity, and WACC are all higher. No Debt to Some Debt: Cost of Equity and Cost of Debt are higher. WACC is lower at first, but eventually higher. Some Debt to No Debt: Cost of Equity and Cost of Debt are lower. It's impossible to say how WACC changes because it depends on where you are in the "U-shaped curve" - if you're above the debt % that minimizes WACC, WACC will decrease. Otherwise, if you're at that minimum or below it, WACC will increase. Higher Risk-Free Rate: Cost of Equity, Debt, and WACC are all higher; they're all lower with a lower Risk-Free Rate. Higher Equity Risk Premium and Higher Beta: Cost of Equity is higher, and so is WACC; Cost of Debt doesn't change in a predictable way in response to these. When these are lower, Cost of Equity and WACC are both lower. Higher Tax Rate: Cost of Equity, Debt, and WACC are all lower; they're higher when the tax rate is lower. ** Assumes the company has debt - if it does not, taxes don't make an impact because there is no tax benefit to interest paid on debt.
Session 10: Objective 3 - Pro-Forma Financial Statements and Project Cash Flows
 
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The Finance Coach: Introduction to Corporate Finance with Greg Pierce Textbook: Fundamentals of Corporate Finance Ross, Westerfield, Jordan Chapter 10: Making Capital Investment Decisions Objective 3 - Key Concepts: Pro-Forma Financial Statements Project Cash Flows CFFA = OCF - NCS - CNWC Project Net Working Capital Capital Spending Depreciation (Non-Cash Expense) Modified ACRS Depreciation (MACRS) = Cost of Assets x Fixed % MACRS = Cost of equipment x % factor (From the chart) Book Value Sales - Costs - Depreciation -------------------- EBIT - Taxes ---------------------- NPAT More Information at: http://thefincoach.com/
Views: 28797 TheFinCoach
Cash Flow Statement Tutorial in 3 Easy Steps: Understanding Cash Flow Statement Analysis
 
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Clicked here http://www.youtube.com/watch?v=SzMbBOtOuJ4 and OMG wow! I'm SHOCKED how easy.. Whether or not you have taken accounting, in all likelihood you know about the ideas of income and profit. Income is just what amount you secure that goes precisely to your bank balance, whether from a payment or organization or both. http://www.youtube.com/watch?v=SzMbBOtOuJ4 Then again, offhandedly put, profit is more exact in that it is just how much you generate from an enterprise... it is your revenue less your costs and expenses. For this reason profit is now and again termed as net income. http://mbabullshit.com/blog/2011/08/06/cash-flow-understanding-cash-flow-statement-tutorial/ Notwithstanding, you ought to be attentive when applying the concept of profit or net income. It signifies you earn, however it will not essentially represent that you receive any real cash. What are the reasons? Just for instance you offer a watch to an important person. He gets the watch from your shop and he boasts to pay you $100 cash after 1 month. Do you record on your books that the sale materialized at present or one month subsequently? Based on generally accepted accounting principles (GAAP), you would need to record that the sale was made at present. Definitely not next month. As a result, you likewise can already write down your profit presently... whether or not you could not receive any actual cash as of yet. This kind of profit is labelled as "accrued" income. You gain income even without the need for recovering any cash to date. This is where the distinction concerning a Net Income Statement and a Free Cash Flow Statement comes in. A Net Income Statement indicates net income, subject to cash income and accrued income along with both cash expenses together with accrued expenses. A Free Cash Flow Statement reveals free cash flow based on all the actual cash which the company earns, less all the cash payments the business enterprise in truth makes. A Free Cash Flow Statement doesn't give thought to accrued income, and it will not think of accrued expenses which have certainly not been paid for in cash. Also, a Net Income Statement will not consider cash payments for capital for the company's building, property and equipment, but the Free Cash Flow Statement displays these transactions provided these payments were already done in the form of cash. It can be told that the Net Income Statement and the Cash Flow Statement symbolize 2 diverse philosophies. Thus who utilizes which ideology? Essentially, accountants prefer to utilize the income statement in reporting business enterprise proceeds. The government typically looks at your income statement as well when it wants to determine the amount of taxes you would need to pay. On the other hand, modern financial managers regularly desire to look at the Free Cash Flow Statement as a factual measure as to "how efficiently the firm is doing", believing that income isn't really income until you actually generate cash.
Views: 352459 MBAbullshitDotCom
Cash Flow Statement with Adjustments - solved problem :-by kauserwise
 
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▓▓▓▓░░░░───CONTRIBUTION ───░░░▓▓▓▓ If you like this video and wish to support this kauserwise channel, please contribute via, * Paytm a/c : 7401428918 * Paypal a/c : www.paypal.me/kauserwisetutorial [Every contribution is helpful] Thanks & All the Best!!! ─────────────────────────── Here is the video about Cash Flow statement in Cost and Management accounting , and in this video we discussed Funds from operation,cash from operation, Funds flow statement with sample problem in simple manner. Hope this will help you to get the subject knowledge at the end. Thanks and All the best. To watch more tutorials pls visit: www.youtube.com/c/kauserwise * Financial Accounts * Corporate accounts * Cost and Management accounts * Operations Research Playlists: For Financial accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnojfVAucCUHGmcAay_1ov46 For Cost and Management accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnpgUjlVR-znIRMFVF0A_aaA For Corporate accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnorJc6lonRWP4b39sZgUEhx For Operations Research - https://www.youtube.com/playlist?list=PLabr9RWfBcnoLyXr4Y7MzmHSu3bDjLvhu
Views: 631563 Kauser Wise
Statement of Cash Flows Explained
 
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The Statement of Cash Flows is explained using the Indirect and Direct methods.
Views: 654597 Ryan Teeter
Cash Flow Statement  ( Indirect Method ) AS 3 | Class 12th | CA Intermediate | Accounts
 
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This video tell us about two things 1) What is Cash Flow Statement? 2) How to prepare it? This video on Cash Flow Statement is useful for Class 11th, class 12th, B.Com, BBA, CA, CS, Accountancy Students, Financial Management students etc. And just because this is an important topic, you should understand it properly. In this Cash Flow Statement, i have discussed Indirect Method. It is based on AS 3.
Views: 151644 Lavish Gupta
Excel Finance Class 82: Relevant Costs For Discounted Cash Flow Analysis = Incremental Cash Flows
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm 1. Incremental Cash Flows = difference between future cash flows with a project & without the project. 2. Any cash flow that exists regardless of whether or not a project is undertaken in not relevant. 3. Incremental Cash Flows = Aftertax Incremental Cash Flows 4. Sunk Costs not relevant 5. Opportunity Costs are relevant 6. Side Effects/Erosion are relevant 7. Change in Net Working Capital is relevant 8. Financing Costs are dealt with as a managerial variable and are not considered with the projects cash flows (Cash Flow To/From Creditors or Stockholders).
Views: 13030 ExcelIsFun
What Is Depreciation - How It Affects Profit And Cash Flow
 
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This video is about depreciation of fixed assets and how it impacts your Profit and Loss, Cash Flow Statement and Balance sheet. You'll also see what happens with your financials when you sell a fixed asset. Whether an item like a car is classified as a fixed asset or inventory depends on its business purpose. Depreciation is a way of allocating the cost of an asset over its useful life. It is a non-cash expense in the Profit and Loss. It is eliminated from Net Profit in the Cash Flow Statement to derive Operating Cash Flow. Accumulated Depreciation is the cumulative depreciation expense that decreases the net book value of the fixed asset. When a fixed asset is sold, its net book value is the basis for calculating whether there is a profit or loss on the sale. This profit is not cash. It is the proceeds of sale of the fixed asset that is cash flow. Therefore, an adjustment is made to Net Profit in the Cash Flow Statement for the Profit or Loss on Sale of Fixed Assets. Related video: http://www.youtube.com/watch?v=Xew8pxVtx_Q This additional video provides further information about depreciation and impact on balance sheet, profit and loss and cash flow as well as the financing decisions of equipment purchase.
Views: 134834 cashflowkungfu
Cash Flow Statement: Investing and Financing Activities (Financial Accounting Tutorial #70)
 
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75% OFF the Full Crash Course on Udemy: http://bit.ly/2oZIdcP We finish up the cash flow statement chapter by completing the investing activities and the financing activities section. We report the purchases of equipment and land, along with the financing of common shares and bonds payable. Website: http://www.notepirate.com Follow us on Facebook: https://www.facebook.com/pages/Note-Pirate/514933148520001?ref=hl Follow us on Twitter: http://twitter.com/notepirate We appreciate all of the support you guys have given us. Be apart of the mission to help us reach more students by subscribing, thumbs upping and adding the videos to your favorites! ** Notepirate is privately owned and exclusive to Notepirate.com.**
Views: 32294 Notepirate
Statement of Cash Flows example: Walmart (case study)
 
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How to read a statement of cash flows? I think the best way to learn how to read a cash flow statement is to go through as many real-life examples as you can! I have done a previous video about the cash flow statement of oil and gas company Shell, and that of electric car company Tesla, both of which I recommend you to watch. Let me show you in this video another example of how a cash flow statement works, by reviewing the cash flow statement for Walmart (NYSE: WMT). I don’t own shares in Walmart, this video is purely for educational purposes. One of Walmart’s key objectives is a financial one: to deliver results and operate with discipline. In the “Walmart by the numbers” one page summary in the front of the annual report, a lot of emphasis is put on revenue performance (which is on the income statement, which I will talk about in an upcoming video), as well as on cash flow performance, more specifically the record operating cash flow and the 44th year of annual dividend increases to shareholders. This video will show you where and how you can get the picture of cash flow from Walmart’s financial statements. Walmart generated a very large cash flow from operating activities. Walmart returned much of that cash flow to shareholders through both share repurchases and dividends, while at the same time investing in the future of the business through CapEx and acquisitions. Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
Excel Finance Class 83: Estimating Cash Flows For NPV calculation
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Learn the basics of how to estimate future cash flows for an investment in order to calculate Net Present Value, Internal Rate Of Return and Payback. See how to calculate an pro forma income statement, estimate depreciation, estimate Operating Cash Flows, Capital Spending and how to use the NPV and IRR functions as well as a Payback calculation.
Views: 36885 ExcelIsFun
What Working Capital Means in Valuation and Financial Modeling
 
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Why Does Working Capital Matter? Many places define it as Current Assets minus Current Liabilities - that is technically true, but it misses something important. By http://breakingintowallstreet.com/biws/ WHY does it matter? What is the point of this? How do you use it? How does it impact a company's value? It's really the CHANGE in Working Capital that matters for valuation and financial modeling purposes. Working Capital, by itself, does not tell you a terrible amount and could mean many different things... but when you also look at the CHANGE in WC, what it is as a % of revenue and other metrics, AND the company's business model, that's when you start gaining insights. What Does the "Change" in Working Capital Mean? Best NOT to use the official definition of Current Assets minus Current Liabilities... First off, cash and debt should be excluded altogether because they are not operational line items and therefore won't factor in when calculating a company's Free Cash Flow in any type of valuation. Also, it's easier to think of this in terms of the *individual items* that comprise these Current, "Operating" Assets and Liabilities. Most Common Current, Operating Assets: Accounts Receivable, Inventory, and Prepaid Expenses. Commonality: Paid for them upfront in cash or represent cash payments you're waiting on. INCREASING these will cost you cash! Most Common Current, Operating Liabilities: Deferred Revenue, Accounts Payable, and Accrued Liabilities. Commonality: You get cash from these! When they increase, your cash flow goes up because you're getting cash in advance (Deferred Revenue) or because you're delaying payments (AP and AL). So with the "Change" in Working Capital, you're seeing which group of items increases by a greater amount: Current Assets Excluding Cash? or Current Liabilities Excluding Debt? If this Change is NEGATIVE, then Current Assets are increasing by MORE than Current Liabilities! Interpretation: Company might be spending a lot on Inventory, might be waiting too long for customer payments, might be paying suppliers very quickly... If this Change is POSITIVE, then Current Liabilities are increasing by more than Current Assets! Interpretation: Could be collecting a lot of cash upfront, might have no or minimal inventory, or might just be delaying payments to suppliers. Examples and Real World Interpretations: Wal-Mart's Change in Working Capital: It's always negative due to huge Inventory expenditures - since WMT is an offline retailer, it MUST pay for Inventory in advance before selling it. It does keep suppliers waiting a fair amount since its AP balance is also high and increasing each year, but Inventory spending outweighs that. This means that as Wal-Mart's business grows, it requires ADDITIONAL cash to keep growing! But as a % of revenue, this is very small so it makes a minimal impact. It will reduce the company's valuation in a DCF, though, because this will push down Free Cash Flow. Amazon's Change in Working Capital: Amazon's Change in WC, by contrast is positive each year. It's still spending a lot on inventory... and actually, as a % of revenue the change is higher than Wal-Mart's each year... BUT it is also not paying suppliers as quickly and is accruing more to the Accounts Payable balance each year. For WMT, the increase in Inventory exceeds the increase in AP every year... for Amazon it's the opposite! Plus, the Deferred Revenue from customers paying in cash in advance for products boosts Amazon's cash flow. The end result: for Amazon, the Change in Working Capital boosts its Free Cash Flow and therefore its valuation in a DCF - quite significantly since it exceeds Net Income. Salesforce's Change in Working Capital: Salesforce also has a positive Change in Working Capital... No inventory required since it's a subscription software company! BUT it still has AR, and Deferred Commissions - must be paid upfront to sales reps in cash and then recognized over term of subscription. The Net Change still ends up being positive, though, thanks to that huge increase in Deferred Revenue each year... subscriptions are often sold months or years in advance, but the cash is collected UPFRONT. So as Salesforce grows, it doesn't require additional cash - it actually GENERATES additional cash. This will increase its Free Cash Flow and therefore increase its valuation in a DCF. Summary - What Does the Change in Working Capital Mean? As the business grows, does it generate MORE cash than you expect... or it does it REQUIRE additional cash to grow? Makes a big difference for a DCF analysis when you value a company based on its cash flows, but also makes a difference for how much funding the business needs to grow, and even what happens when that business gets acquired. Further Resources http://youtube.breakingintowallstreet.com.s3.amazonaws.com/107-04-WMT-AMZN-CRM-Working-Capital.xlsx
Cash Flow from Operations (Statement of Cash Flows)
 
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This video demonstrates how to calculate Cash Flow from Operations (aka Operating Cash Flow) using the Indirect Method on the Statement of Cash Flows. The video uses a comprehensive example to show how Cash Flow from Operations is computed and explains how Cash Flow from Operations is different from Cash Flow from Investing and Cash Flow from Financing. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 111628 Edspira
Cash Flow from Investing (Statement of Cash Flows)
 
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This video shows how to calculate Cash Flow from Investing Activities for the Statement of Cash Flows. A comprehensive example is provided to illustrate how Cash Flow from Investing accounts for the net cash effects of the purchase or sale of fixed assets, the purchase of sale of securities, and the purchase or sale of other investments. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 57872 Edspira
Statement of Cash Flows (Indirect Method)
 
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This video demonstrates how to prepare a Statement of Cash Flows using the Indirect Method. A comprehensive example is provided to illustrate how an income statement, comparative balance sheet, and additional information are used to create a Statement of Cash Flows from scratch. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 185913 Edspira
Financial Modeling Quick Lesson: Building a Discounted Cash Flow (DCF) Model - Part 1
 
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Learn the building blocks of a simple one-page discounted cash flow (DCF) model consistent with the best practices you would find in investment banking. If you are preparing for investment banking interviews, know that the DCF is the source of a TON of investment banking interview questions. To download the backup Excel file, go to www.wallstreetprep.com/blog/financial-modeling-quick-lesson-building-a-discounted-cash-flow-dcf-model-part-1/ The DCF modeled here is a simplified version of a fully-integrated DCF model. For a deeper dive into DCF modeling in Excel, please visit www.wallstreetprep.com.
Views: 379122 Wall Street Prep
Amortization and depreciation | Finance & Capital Markets | Khan Academy
 
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Comparing depreciation and amortization. Created by Sal Khan. Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/accounting-and-financial-stateme/depreciation-amortization-tut/v/depreciation-in-cash-flow?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: How do you account for things that get "used up" or a cost that should be spread over time. This tutorial has your answer. Depreciation and amortization might sound fancy, but you'll hopefully find them to be quite understandable. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 174140 Khan Academy
Price to Cash Flow Ratio - Explained in Hindi
 
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Price to cash flow ratio is often used to analyse stocks because PE ratio and PB ratio can be manipulated by a company. In this hindi video, we understand price to cash flow ratio meaning, interpretation and when should it be used. Related Videos: Earnings Per Share: https://youtu.be/SDXp64flfJI PE Ratio (Price to Earning Ratio): https://youtu.be/pmd1kb-D1jE PEG Ratio (Price Earnings To Growth Ratio): https://youtu.be/wglhWAQ84t8 PB Ratio (Price to Book Value Ratio): https://youtu.be/-6Z1ISvWq1U Price to Cash Flow Ratio का अक्सर Stocks को analyse करने के लिए उपयोग किया जाता है क्योंकि PE Ratio और PB Ratio को कंपनी द्वारा manipulate किया जा सकता है। इस हिंदी वीडियो में, हम price to cash flow ratio का meaning, interpretation और हमें इसको कब use करना चाहिए, ये समझ सकते हैं| Share this video: https://youtu.be/BwYSlPv0KPU Subscribe To Our Channel and Get More Finance Tips: https://www.youtube.com/channel/UCsNxHPbaCWL1tKw2hxGQD6g To access more learning resources on finance, check out www.assetyogi.com In this video, we have explained: What is Price to Cash Flow Ratio? When should price to cash flow ratio be used? How to calculate price to cash flow ratio? What is the difference between free cash flow and cash flow? What does a high price to free cash flow ratio mean? How does cash flow work? How to calculate free cash flow? What does a operating cash flow mean? What is the importance of price to cash flow ratio? How to check Price to cash flow online? Make sure to like and share this video. Other Great Resources AssetYogi – http://assetyogi.com/ Follow Us: Pinterest - http://pinterest.com/assetyogi/ Facebook – https://www.facebook.com/assetyogi Linkedin - http://www.linkedin.com/company/asset-yogi Google Plus – https://plus.google.com/+assetyogi-ay Twitter - http://twitter.com/assetyogi Instagram - http://instagram.com/assetyogi Hope you liked this video in Hindi on “Price To Cash Flow Ratio"
Views: 8898 Asset Yogi
Excel Finance Class 88: Scenario Analysis For Cash Flow & NPV Calculations
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm See how to spread the numbers with scenario analysis so we have a pessimistic and optimistic range of values. We can use 10% and adjust our cost and revenue numbers accordingly. Optimistic: sales and units up and costs down. Pessimistic: sales and units down and costs up. See Excel's Scenario Manager also.
Views: 34125 ExcelIsFun
Net Present Value (NPV)
 
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This video explains the concept of Net Present Value and illustrates how to calculate the Net Present Value of a project via an example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 572341 Edspira
The Cash Budget
 
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This video explains what the cash budget is in Managerial Accounting and demonstrates how to put together a cash budget with a comprehensive example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 173581 Edspira
How to Build a Forecasting Model in Excel - Tutorial | Corporate Finance Institute
 
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How to Build a Forecasting Model in Excel - Tutorial | Corporate Finance Institute Enroll in the Full course to earn your certificate and advance your career: http://courses.corporatefinanceinstitute.com/courses/fpa-rolling-12-month-cash-flow-forecast-course Master the art of building a rolling 12-month cash flow forecast model in our Financial Planning & Analysis (FP&A) course. In this course you will learn to build a cash flow model from scratch complete with assumptions, financials, supporting schedules and charts. -- FREE COURSES & CERTIFICATES -- Enroll in our FREE online courses and earn industry-recognized certificates to advance your career: ► Introduction to Corporate Finance: https://courses.corporatefinanceinstitute.com/courses/introduction-to-corporate-finance ► Excel Crash Course: https://courses.corporatefinanceinstitute.com/courses/free-excel-crash-course-for-finance ► Accounting Fundamentals: https://courses.corporatefinanceinstitute.com/courses/learn-accounting-fundamentals-corporate-finance ► Reading Financial Statements: https://courses.corporatefinanceinstitute.com/courses/learn-to-read-financial-statements-free-course ► Fixed Income Fundamentals: https://courses.corporatefinanceinstitute.com/courses/introduction-to-fixed-income -- ABOUT CORPORATE FINANCE INSTITUTE -- CFI is a leading global provider of online financial modeling and valuation courses for financial analysts. Our programs and certifications have been delivered to thousands of individuals at the top universities, investment banks, accounting firms and operating companies in the world. By taking our courses you can expect to learn industry-leading best practices from professional Wall Street trainers. Our courses are extremely practical with step-by-step instructions to help you become a first class financial analyst. Explore CFI courses: https://courses.corporatefinanceinstitute.com/collections -- JOIN US ON SOCIAL MEDIA -- LinkedIn: https://www.linkedin.com/company/corporate-finance-institute-cfi- Facebook: https://www.facebook.com/corporatefinanceinstitute.cfi Instagram: https://www.instagram.com/corporatefinanceinstitute Google+: https://plus.google.com/+Corporatefinanceinstitute-CFI YouTube: https://www.youtube.com/c/Corporatefinanceinstitute-CFI
Cost-Cutting Proposal Using Discounted Cash Flow| Corporate Finance|CPA Exam BEC|CMA Exam| Chp10 p 6
 
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In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.[1] The International Financial Reporting Standards defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid gives rise to operating cash flows.[2] To calculate cash generated from operations, one must calculate cash generated from customers and cash paid to suppliers. The difference between the two reflects cash generated from operations.
DEBT TO CASH FLOW? (Let's Talk About Leverage in Finance!)
 
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Matthew Pillmore, president of VIP Financial Education, is again joined by real estate expert Kevin Amolsch of Pine Financial, self leadership expert KellyAnne Zielinski of Self Leadership Global, and personal finance expert Joe McKowen, to discuss how they each have utilized leverage in their financial plan. They dive into how leverage is used as an entrepreneur, in small business growth, in real estate and investing in opportunities. In this episode, we take a popular question from our recent live Q&A, just in case you didn't catch it (considering it is over 2 hours long!). Comment below with any leverage, debt, banking and borrowing, finances, investing, and/or lending question you'd like us to answer in our next live Q&A or possibly in our next video! Don't forget to sign up TODAY for your exclusive one on one consultation at: http://www.FreeCoachingCalendar.com Check out Kevin's channel PineFinancial: https://www.youtube.com/user/pinefinancial/videos Check out KellyAnne's channel Self Leadership Global: https://www.youtube.com/user/TheWealthyWord Have you checked out our ongoing contest?? CONTEST RULES: In order to be eligible for the ongoing contests you must: A) Be Subscribed B) Comment on this video (We’d love to hear what you’ve learned from our channel and how it is impacting you!) Each time you comment on a new video your name will be entered into the contest drawing, so the more you comment on the videos, the better your chances of winning! You can also gain additional entries by sharing our video on your social media accounts or by commenting on our Instagram or Facebook accounts. CONTEST PRIZES: 1: $25 Amazon Gift Cards a) 1 winner selected each week for next 24 weeks. 2: 2 Hour Skype Coaching Session a) 1 winner selected each month for next 5 months. b) To be considered: - Must have a MINIMUM of $500 average cash flow each month. No exceptions. 3: GRAND PRIZE - 2 Night Trip For Two to Denver and an Afternoon With Mr. Pillmore a) 1 winner selected first week of October. b) To be considered: - Must have a MINIMUM of $500 average cash flow each month. No exceptions. - Win a 2 hour Skype session with Mr. Pillmore. Current coaching members are also eligible for the contest! Our coaching costs can change with demand. To see our current pricing please watch this video: https://www.youtube.com/watch?v=HbVLmCvFjoI Want more actionable financial tips and tricks like this one? Check out our YouTube channel here https://www.youtube.com/channel/UC45hHuqWfdi7TIZg0RDG9_g Make sure to check out our social channels for more insight and industry news! Facebook - https://www.facebook.com/VIPFinancialEducation/ Instagram - https://www.instagram.com/vipfinancialed/ Instagram (Lifestyle) - https://www.instagram.com/vipfinancialedlifestyle/ Twitter - https://twitter.com/VIPFinancialEd LinkedIn - https://www.linkedin.com/in/vipfinancialed/ BBB A+ Rating - https://www.bbb.org/denver/business-reviews/financial-services/vip-enterprises-llc-in-westminster-co-90024254/ Complimentary services and products mentioned in our videos are available for a limited time only and are not guaranteed at the viewing of this video. VIP Financial Education provides resources for educational purposes only. Our education is not a substitute for legal, tax, or financial advice and results vary. VIP Financial Education encourages viewers to do their homework before taking any financial action. VIP Enterprises, LLC may from time to time earn commissions by recommending various products, services, and programs.
Views: 3503 VIPFinancialEd
Increase CASH FLOW, Eliminate INTEREST COSTS, DEBT FREE & More!? (DEBT WEAPONS 101)
 
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Debt Weapons are something we mention in a lot of videos and the truth is that they are a complex subject to cover in every video they're mentioned in. So, in this video Matthew Pillmore, President of VIP Financial Education, details what these financial tools we call "Debt Weapons" actually are, the various types available and how they can be used to increase your cash flow position, eliminate tens to hundreds of thousands of dollars on future interest costs, pay off a mortgage in 5 years, become debt free, pay off all your mortgage and non-mortgage related debts faster and more efficiently, and so much more. Be sure to watch the entire video as Matt lists out some of the most popular specific forms of Debt Weapons that VIP and their coaching members utilize on a daily basis to meet and exceed their financial goals while continuing to live their ideal lifestyle in the process. Don't forget to sign up TODAY for your exclusive one on one consultation at: http://www.FreeCoachingCalendar.com Our coaching costs can change with demand. To see our current pricing please watch this video: https://www.youtube.com/watch?v=HbVLmCvFjoI Links to videos mentioned in this episode: Benefits to Financial Coaching: Coming soon! 50k Debt Weapon Video: https://www.youtube.com/watch?v=Q4E1u7ws_M8 Lifetime Cost of Cars: https://www.youtube.com/watch?v=aWfjnKsfE6Q Why I LOVE HELOCS: https://www.youtube.com/watch?v=NxKzaLEQCpQ Why I HATE HELOCS: https://www.youtube.com/watch?v=mwPXN9HpgfI Debt Weapon Process Part 1: https://www.youtube.com/watch?v=agScQqbaNeI Debt Weapon Process Part 2: https://www.youtube.com/watch?v=JGQkbqXSUiM Want more actionable financial tips and tricks like this one? Check out our YouTube channel here https://www.youtube.com/channel/UC45hHuqWfdi7TIZg0RDG9_g Make sure to check out our social channels for more insight and industry news! Facebook - https://www.facebook.com/VIPFinancialEducation/ Instagram - https://www.instagram.com/vipfinancialed/ Instagram (Lifestyle) - https://www.instagram.com/vipfinancialedlifestyle/ Twitter - https://twitter.com/VIPFinancialEd LinkedIn - https://www.linkedin.com/in/vipfinancialed/ BBB A+ Rating - https://www.bbb.org/denver/business-reviews/financial-services/vip-enterprises-llc-in-westminster-co-90024254/ Complimentary services and products mentioned in our videos are available for a limited time only and are not guaranteed at the viewing of this video. VIP Financial Education provides resources for educational purposes only. Our education is not a substitute for legal, tax, or financial advice and results vary. VIP Financial Education encourages viewers to do their homework before taking any financial action. VIP Enterprises, LLC may from time to time earn commissions by recommending various products, services, and programs. #DebtWeapons #EliminateInterestCosts #IncreaseCashFlow #VIPFinancialEd
Views: 30094 VIPFinancialEd
CapEx vs OpEx explanation
 
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CapEx versus OpEx. Capital Expenditures versus Operating Expenditures. There is a finance and accounting aspect to the terms CapEx and Opex, as well as a business model aspect. Let’s discuss both, and walk through some examples of how the terms CapEx and OpEx are used. CapEx is Capital Expenditures. OpEx is Operating Expenditures. What these terms have in common is the word expenditures, you are spending money, but in different ways. Capital Expenditures. As a working definition of CapEx, this is money spent by a business or organization to acquire or upgrade fixed assets, such as buildings, machines and equipment. Operating Expenditures. If CapEx is the upfront investment to buy a fixed asset, then a working definition of OpEx is the ongoing spending to keep the fixed asset running. For an expenditure to be considered as CapEx, you have to own an asset. There is a threshold level for expenditures to qualify as CapEx: there must be a useful life of more than one year, and the asset value must be more than a minimum amount. I have worked with a company where this minimum was $2500, and others where it was $7000. Please check with the finance department of your company on what your minimum level is. How about that part of maintenance where you are improving the performance of a machine and increase its capacity? What about software developed for internal use? What about the development phase of R&D? You could argue in all three cases that future economic benefits are generated by these projects, and according to the matching principle in finance it would be appropriate to capitalize these costs, and subsequently depreciate or amortize these assets over their useful life. Each of these cases will have to be evaluated carefully against current US GAAP or IFRS rules (depending on where your company is listed), and you will have to meet very strict criteria to apply a CapEx treatment. How does CapEx affect the financial statements? Let’s take a look at the balance sheet, the income statement and the cash flow statement, when we answer the question “does this expenditure qualify for CapEx (it meets the capitalization criteria) or it does not qualify as CapEx?”. First of all, the CapEx spend is a cash outflow recorded in “Cash From Investing Activities”. On the balance sheet, it gets accounted for as an asset, in the Plant and Equipment category. Over the years of its useful life, the asset gets depreciated, and the depreciation charge hits the income statement or P&L in each of the years of the assets’ economic life. I will link to my video about deprecation if you are interested in learning how that works: https://www.youtube.com/watch?v=6SY8s1_OEro Do you go for the upfront CapEx investment to own servers for your datacenter, where you are unsure how much capacity you will actually need, or do you pay a monthly OpEx fee for an external cloud service where it’s pretty much “pay as you go” and “spend what you use”? I can’t give you a “one size fits all” answer to this question, it’s really something that an IT manager and a finance manager should analyze together. Risk and scale should be part of this conversation. The evaluation is a variation of the age-old “own versus use”, “buy versus rent”, “buy versus lease” discussion, which is more relevant than ever before in these days of ubiquitous digital devices and tools, disruption of mobility models through Uber and others, and disruption of the travel and leisure models through Airbnb. This video discusses the impact of CapEx versus OpEx on the balance sheet, income statement, and cash flow statement, as well as ratios such as ROA. For more information on ROA and DuPont analysis, watch https://www.youtube.com/watch?v=bhbDDSohJ84 Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!
THIS BANKING SECRET WILL INCREASE YOUR CASH FLOW (Advanced Financial Education)
 
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This banking secret that we call Paycheck Parking, will increase your cash flow without requiring you to make more money through your income. Though this may look like an advanced financial education banking secret, it is the easiest way to grow your cash flow, get out of debt faster and achieve your financial goals in a fraction of the time. In today's video Matthew Pillmore, president of VIP Financial Education, shows how Paycheck Parking works and how to get money without increasing income. This is a real life example from a VIP financial coaching member and it shows how you can pay off debt faster than traditional methods like the ones Dave Ramsey teaches, all while increasing your cash flow at the same time. This can speed up the debt free process, getting you closer to your financial freedom in a fast and efficient way. Paycheck Parking is a technique that you can use to manage your income far more effectively than simply depositing it into your checking and savings account.    As you know, the traditional savings accounts pay very poorly. In fact, you're considered lucky to earn 2% Annual Percentage Yield. Average annual inflation is 3.27% so, the very best you can expect to accomplish by keeping your money in savings is a depreciating value of your money by 1.2%.  It's because of this simple fact, that the notion of having your money sitting in the bank, INCLUDING your emergency reserves is mathematically a bad deal.      So this set us on a quest to uncover more beneficial ways to manage our income and expenses in order to make the most of our money, pay down a loan, and grow our cash flow.  The answer, is PAYCHECK PARKING. In this video I'll give you a perfect example that I encountered last week with an audience member from YouTube. This is better than just learning how to budget. Don't forget to sign up TODAY for your exclusive one on one consultation at: http://www.FreeCoachingCalendar.com Don't want to wait for the free coaching session? Sign up for one of our QuickStart vacancies there as well! Did you know we have a contest going on? Check out the rules & prizes below! CONTEST RULES: In order to be eligible for the ongoing contests you must: A) Be Subscribed B) Comment on this video (We’d love to hear what you’ve learned from our channel and how it is impacting you!) Each time you comment on a new video your name will be entered into the contest drawing, so the more you comment on the videos, the better your chances of winning! You can also gain additional entries by sharing our video on your social media accounts or by commenting on our Instagram or Facebook accounts. CONTEST PRIZES: 1: $25 Amazon Gift Cards a) 1 winner selected each week for next 24 weeks. 2: 2 Hour Skype Coaching Session a) 1 winner selected each month for next 5 months. b) To be considered: - Must have a MINIMUM of $500 average cash flow each month. No exceptions. 3: GRAND PRIZE - 2 Night Trip For Two to Denver and an Afternoon With Mr. Pillmore a) 1 winner selected first week of October. b) To be considered: - Must have a MINIMUM of $500 average cash flow each month. No exceptions. - Win a 2 hour Skype session with Mr. Pillmore. Current coaching members are also eligible for the contest! Our coaching costs can change with demand. To see our current pricing please watch this video: https://www.youtube.com/watch?v=HbVLmCvFjoI Want more actionable financial tips and tricks like this one? Check out our YouTube channel here https://www.youtube.com/channel/UC45hHuqWfdi7TIZg0RDG9_g Make sure to check out our social channels for more insight and industry news! Facebook - https://www.facebook.com/VIPFinancialEducation/ Instagram - https://www.instagram.com/vipfinancialed/ Instagram (Lifestyle) - https://www.instagram.com/vipfinancialedlifestyle/ Twitter - https://twitter.com/VIPFinancialEd LinkedIn - https://www.linkedin.com/in/vipfinancialed/ BBB A+ Rating - https://www.bbb.org/denver/business-reviews/financial-services/vip-enterprises-llc-in-westminster-co-90024254/ Complimentary services and products mentioned in our videos are available for a limited time only and are not guaranteed at the viewing of this video. VIP Financial Education provides resources for educational purposes only. Our education is not a substitute for legal, tax, or financial advice and results vary. VIP Financial Education encourages viewers to do their homework before taking any financial action. VIP Enterprises, LLC may from time to time earn commissions by recommending various products, services, and programs. #BankingSecrets #PaycheckParking #VIPFinancialEd #IncreaseCashFlow
Views: 28563 VIPFinancialEd
Free Cash Flow: How to Interpret It and Use It In a Valuation
 
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You'll learn what "Free Cash Flow" (FCF) means, why it's such an important metric when analyzing and valuing companies. By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" You'll also learn how to interpret positive vs. negative FCF, and what different numbers over time mean -- using a comparison between Wal-Mart, Amazon, and Salesforce as our example. Table of Contents: 0:54 What Free Cash Flow (FCF) is and Why It's Important 2:26 What Positive FCF Tells You, and What to Do With It 3:56 What Negative FCF Tells You, and What to Do With It 4:38 Why You Exclude Most Investing and Financing Activities in the FCF Calculation 7:55 How to Use and Interpret FCF When Analyzing Companies 11:58 Wal-Mart vs. Amazon vs. Salesforce: Free Cash Flow Across Sectors 19:33 Recap and Summary What is Free Cash Flow? Normally it's defined as Cash Flow from Operations minus Capital Expenditures. Tells you the company's DISCRETIONARY cash flow - after paying for expenses and working capital requirements like inventory and capital expenditures, how much cash flow can it put to use for other purposes? If the company generates a lot of Free Cash Flow, it has many options: hire more employees, spend more on working capital, invest in CapEx, invest in other securities, repay debt, issue dividends or repurchase shares, or even acquire other companies. If FCF is negative, you need to dig in and see if it's a one-time issue or recurring problem, and then figure out why: Are sales declining? Are expenses too high? Is the company spending too much on CapEx? If FCF is consistently negative, the company might have to raise debt or equity eventually, or it might have to restructure itself or cut costs in some other way. Why Do You Exclude Most Investing and Financing Activities Other Than CapEx? Because all other activities are, for the most part, "optional" and non-recurring. A normal company does not NEED to buy stocks or issue dividends or repurchase shares... those are all optional uses of cash. All it NEEDS to do to keep its business running is sell products to customers, pay for expenses, and keep investing in longer-term assets such as buildings and equipment (PP&E). Debt repayment and interest expense are "borderline" because some variations of Free Cash Flow will include them, others will exclude them, and some will include interest expense but not debt principal repayment. How Do You Use Free Cash Flow? It's used in a DCF (or at least, a variation of it) to value a company; it's also used in a leveraged buyout (LBO) model to determine how much debt a company can repay. And you can calculate it on a standalone basis for use when comparing different companies. The key is to DIG IN and see why Free Cash Flow is changing the way it is - Organic sales growth? Artificial cost-cutting? Accounting gimmicks? Different working capital policies? IDEALLY, FCF will be increasing because of higher units sales and/or higher market share, and/or higher margins due to economies of scale. Less Good: FCF is growing due to cost-cutting, CapEx slashing, or FCF is growing in spite of falling sales and profits... because of a company playing games with Working Capital, non-core activities, or CapEx spending. Wal-Mart vs. Amazon vs. Salesforce Comparison Main takeaway here is that Wal-Mart's FCF is all over the place, but Cash Flow from Operations is MOSTLY growing, so that appears to be driven by the also growing organic sales. The company is doing some odd things with CapEx and Working Capital, which led to fluctuations in FCF - not exactly "bad" or "good," just neutral and requires more research. With Amazon, they've increased CapEx spending massively in the past 2 years so that has pushed down CapEx. CFO is growing, driven by organic revenue growth (no "games" with Working Capital), but it's very difficult to assess whether all that CapEx spending will pay off in the long-term. With Salesforce, FCF is definitely growing organically (Revenue growth leads directly to CFO growth, and CapEx varies a bit but not as much as with Amazon), but the company is also spending a ton on acquisitions... will it continue? If CapEx as a % of revenue stays low, it will most likely continue to spend on acquisitions - unlikely to issue dividends, repurchase shares, etc. since it's a growth company. Further Resources http://youtube-breakingintowallstreet-com.s3.amazonaws.com/105-10-Free-Cash-Flow.xlsx http://youtube-breakingintowallstreet-com.s3.amazonaws.com/105-10-Walmart-Financial-Statements.pdf http://youtube-breakingintowallstreet-com.s3.amazonaws.com/105-10-Amazon-Financial-Statements.pdf http://youtube-breakingintowallstreet-com.s3.amazonaws.com/105-10-Salesforce-Financial-Statements.pdf
Financial Modeling Quick Lesson: Cash Flow Statement (Part 1)
 
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Learn the building blocks of a financial model. In this video, we'll build a cash flow statement given an income statement and balance sheet in Excel. To download the Excel template that goes with this video, go to http://www.wallstreetprep.com/blog/financial-modeling-quick-lesson-cash-flow-statement-part-1/ The accounting here is a simplified presentation of how the three major financial statements are inter-related and lays the foundation of financial statement models in investment banking. Many accounting questions that we see time and again in finance interviews are designed to test the understanding explained in this exercise.
Views: 390280 Wall Street Prep
Startup Financials Boot Camp - #2 - Cash Flow Forecast
 
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If you want to build a successful business, it’s important to know your numbers. In this web series, you’ll learn how to calculate your start-up costs, test the viability of your business idea, price your products and develop financial forecasts that will help you manage your company. You’ll also learn: - How to develop budgets - How to create and analyse an income statement - How to calculate your break-even - How to develop a cash flow forecast and manage your cash flow - How to read and analyse your balance sheet - How to cost and price your products and services profitably By viewing these webinars, you will get access to a range of financial templates to help you better plan your business, while walking away with a better understanding of your business’s financials to improve your chances of success. To download the workbook associated with this boot camp visit - https://www.dropbox.com/sh/4qs6do1gr94218f/AABRGWvR1Qr-nWNZ9WC3guCaa?dl=0
Views: 6519 Enterprise Toronto
How to Value a Company in 3 Easy Steps - Valuing a Business Valuation Methods Capital Budgeting
 
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Clicked here http://www.MBAbullshit.com/ and OMG wow! I'm SHOCKED how easy.. Just for instance I possessed a company comprising of a neighborhood store. To put together that center, I invested $1,000 one year ago on apparatus along with other assets. The equipment in addition to other assets have depreciated by 10% in a single year, so now they're valued at only $900 inside the accounting books. In case I was going to make an effort to offer you this company, what amount would an accountant value it? Relatively easy! $900. The cost of the whole set of assets (less liabilities, if any) can give accountants the "book value" of a typical organization, and such is systematically how accountants observe the worth of an enterprise or company. (We employ the use of the word "book" because the worth of the assets are penned within the company's accounting "books.") http://www.youtube.com/watch?v=6pCXd4i7DM0 However, imagine this unique company is earning a juicy cash income of $2,000 annually. You would be landing a mighty incredible deal in the event I sold it to you for just $900, right? I, on the flip side, might be taking out a pretty sour pact in the event I offered it to you for just $900, on the grounds that as a result I will take $900 but I will shed $2,000 per annum! Due to this, business directors (dissimilar to accountants), don't make use of merely a company's book value when assessing the value of an organization.So how do they see how much it really is worth? To replace utilizing a business' books or even net worth (the market price of the firm's assets minus the business enterprise's liabilities), financial managers opt to source enterprise worth on how much money it gets in relation to cash flow (real cash acquired... contrary to only "net income" that may not generally be in the format of cash). Basically, a company making $1,000 "free cash flow" monthly having assets worth a very small $1 would remain to be worth a great deal more versus a larger company with substantial assets of $500 in the event the humongous company is attaining only $1 yearly.So far, how do we achieve the exact value of your business? The simplest way would be to mainly look for the net present value of the total amount of long run "free cash flows" (cash inflow less cash outflow).Needless to say, you will come across much more sophisticated formulas to find the value of a company (which you wouldn't genuinely need to learn in detail, since there are numerous gratis calculators on the web), but practically all of such formulas are in a way driven by net present value of cash flows, plus they are likely to take into consideration a few factors for example growth level, intrinsic risk of the company, plus others.
Views: 315592 MBAbullshitDotCom
Excel Finance Class 89: Sensitivity Analysis For Cash Flow & NPV Calculations
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm See how to do Sensitivity Analysis and adjust a single variable for a NPV calculation. See the NPV and SLOPE function and TRANSPOSE array Functions and how to create a X Y Scatter chart.
Views: 84757 ExcelIsFun
Weighted Average Cost of Capital (WACC)
 
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This video explains the concept of WACC (the Weighted Average Cost of Capital). An example is provided to demonstrate how to calculate WACC. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 372064 Edspira
How the Three Financial Statements Fit Together
 
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Brought to you by StratPad: Simple Business Plan App. Try it free at http://www.stratpad.com This video completes our course on financial statements by showing you how the income statement, balance sheet and statement of cash flows are connected. We'll take you through two months in the life of a company as it's recorded in the financial statements. If you've watched all the videos in the series, you'll recognize all the terms and realize how far you've come in your understanding of financial statements. http://www.stratpad.com/financial-statements-made-easy-video-course/how-the-three-financial-statements-fit-together/ Video Transcript Nicely done! You've made it to the last video. And, by the way, don't be put off by the busy-ness of this screen. You know all this stuff here: income statement, statement of cash flows, the balance sheet. What I'm going to do now is a very fast rattle through of all three of these, just to cover off all the work that you already know. Alright are you ready? Let's get going. Oh one thing -- by the way -- you'll see negative numbers don't have a dash in front of them; they're represented with brackets around them. Ok, ready go. This is for January for Acme Web Design. The income statement starts off with sales of $5,000 and a corresponding costs of goods sold of $1,000. We know to subtract the $1,000 from the $5,000 to get to $4,000. Then we have a bunch of expenses: general and and administrative $6,000 -- that's your rent, telecommunications costs, administrative costs, that type of thing; no research and development costs; we have sales and marketing -- there was salary in there and a small campaign. Add all those up to get to $9,000. Then subtract $9,000 from $4,000 to get to ($5,000). That's our fancily named subtotal: earnings before interest, taxes, depreciation and amortization or called EBITDA. We didn't have no interest -- we didn't pay anything to the bank — and therefore our net income is a ($5,000) loss. That means we didn't make any money here. That ($5,000) goes over to the top of the statement of cash flows. The $5,000 worth of sales wasn't paid to us. Half of it instead went to accounts receivable ($2,500). When that happens it decreases the amount of cash available, therefore a negative number. But you can also see that it increases the accounts receivable showing on the balance sheet $2,500. But then, we didn't pay some of the costs this month. That increased our accounts payable $1,000 and also increased the amount of cash that we have on hand. There's our accounts payable down here $1,000. So total cash from operations is ($6,500). We didn't buy any equipment, we didn't take out a loan, but the founder did put in $25,000 against common stock. Therefore, the total cash proceeds coming into the company this month is $18,500. That's the total of this ($6,500) and this zero and this $25,000. Cash at the start of the period was zero. Therefore, cash at the end of the period was $18,500 and this starts off our balance sheet right here. We know what the accounts receivable is $2,500, therefore total current assets is $21,000. No equipment. There's the accounts payable $1,000. Total current liabilities of $1,000. No long-term liabilities. Total overall liabilities of $1,000. There's the common stock $25,000 sliding in here. Retained earnings is, as you know, the total of all the profits and losses since the company began. If you look down, you see a total of liabilities and equity of $21,000 which balances with the total assets of $21,000. Our balance sheet balances -- whew. We're almost there. I just want to show you one more thing. Ok, so what I've done here is added in another month. We're going to go through the month of February and we're going to do it very quickly. Alright, sales of $7,000 is up from the previous month. Corresponding 20 per cent of cost of goods sold $1,400 leaves a total gross profit of $5,600. Expenses hasn't changed, still $9,000 worth of expenses. $5,600 of gross profit minus the $9,000 of expenses equals the EBITDA of ($3,400). So we're still losing money but not as badly, which is exactly what you want to see in a new company. We did pay the bank $100 worth of interest and I'll show you why in just a minute. ($3,400) minus $100 is equal to ($3,500) the loss for the month. And that starts off our statement of cash flows at the top ($3,500). Ok, here's a little trickiness. The $2,500 in accounts receivable last month got paid to us this month but we also then took half. This sales then went back into accounts receivable. The difference between the $2,500 from last month and the $3,500 from this month is $1,000. So accounts receivable went up by $1,000 as you can see here, which just reduces our cash. The rest of the video transcript can be found here: http://www.stratpad.com/financial-statements-made-easy-video-course/how-the-three-financial-statements-fit-together/
Views: 178617 Alex Glassey
Decision-Making - Analyzing Incremental After Tax Cash Flows - Initial Investment Phase
 
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Decision-Making and Scenarios Module 2 Evaluating Projects To get certificate subscribe at: https://www.coursera.org/learn/wharton-quantitative-modeling/home/welcome ============================ Decision-Making and Scenarios https://www.youtube.com/playlist?list=PL2jykFOD1AWZShxCP4n6cmWJulFlHfXX0 ============================ Youtube channel: https://www.youtube.com/user/intrigano ============================ https://scsa.ge/en/online-courses/ https://www.facebook.com/cyberassociation/ Decision-Making and Scenarios About this course: This course is designed to show you how use quantitative models to transform data into better business decisions. You’ll learn both how to use models to facilitate decision-making and also how to structure decision-making for optimum results. Two of Wharton’s most acclaimed professors will show you the step-by-step processes of modeling common business and financial scenarios, so you can significantly improve your ability to structure complex problems and derive useful insights about alternatives. Once you’ve created models of existing realities, possible risks, and alternative scenarios, you can determine the best solution for your business or enterprise, using the decision-making tools and techniques you’ve learned in this course. Module 2 Evaluating Projects In this module, you'll learn how to evaluate a project with emphasis on analyzing the incremental after-tax cash flows associated with the project. You'll work through a concrete example using alternative scenarios to test the effectiveness of this method. You'll also learn why only future cash flows are relevant, why to ignore financial costs, include all incidental effects, remember working capital requirements, consider the effect of taxes, forget sunk costs, remember opportunity costs, use expected cash flows, and perform sensitivity analysis. By the end of this module, you'll be able to evaluate projects more thoroughly and effectively, with emphasis on how to model the change in the company’s after-tax cash flows, so that you can make more profitable decisions. Upcoming events/projects: Cyber Security Summer Camp in Georgia Bakuriani for school students; 11-18 years old; as the trainers and counselors are involved leading cyber security experts and professors. Working language is English. https://scsa.ge/en/international-cyber-camp-2/ ---------------------------------------- We offer you website development, penetration testing and cryptanalysis; Our team consists of professionals. To work with us is always comfortable and easy because our job is our pleasure. https://utoweb.com/en/main/ https://scsa.ge/en/ ----------------------------------------- We invite you to publish your articles in our peer-review International Scientific Cyber Security Journal; publication is free. www.journal.scsa.ge ----------------------------------------- If you like our channel and would like to support our work please donate. We are working for you! https://www.paypal.me/cyberassociatio
Views: 41 intrigano
IRR (Internal Rate of Return)
 
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This video explains the concept of IRR (the internal rate of return) and illustrates how to calculate the IRR via an example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 685667 Edspira
Incremental IRR
 
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Due to differences in the scale, timing, and riskiness of projects, we cannot simply compare the IRRs (incremental rates of return) of two projects. However, we can compute the incremental cash flows of choosing one project versus the other and compute an incremental IRR for these cash flows. This incremental IRR can then be compared to the discount rate to determine which project is more profitable. That being said, the incremental IRR is problematic when some of the negative cash flows do not precede the positive cash flows. Furthermore, the incremental IRR tells us which project is more profitable but it does not tell us whether each of the projects has a positive NPV on a stand-alone basis. And, if the projects have different costs of capital, then we have the additional problem of not knowing the cost of capital to which we should be comparing the incremental IRR. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 66375 Edspira
Free Cash Flow ▌Finance
 
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Understanding Free Cash Flow ::: copyright © INVESTOPEDIA
Views: 21174 Xargo
Statement of Cash Flows - Lesson 2
 
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In this video, 25.01 – Statement of Cash Flows – Lesson 2, Roger Philipp, CPA, CGMA, has a discussion on the statement of cash flows, mainly that all cash inflows and outflows are categorized as operating, investing, or financing activities. Roger goes into detail on the definitions of operating, investing, and financing activities, providing examples for all. He tells us to remember that interest paid and interest received are both considered operating activities under US GAAP, though IFRS is different. And that dividends received are an operating cash inflow, but dividends paid are a financing cash outflow, because they are considered distributions to owners. Roger does some journal entries on the whiteboard to help show both sources and uses of cash on the statement of cash flows. Then Roger explains how journal entries help to reconcile between accrual accounting and cash flow, going into different scenarios and angles: maybe there was interest expense, but it wasn’t all cash, because some of it was amortization of bond discount; maybe there was depreciation expense, but it was all accumulated amortization, and no cash. Find out what Roger’s conclusions are, and don’t miss another handy mnemonic that is LIP for investing activities – Loans, Investments, Property. Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now as I said, we have operating activities. What are operating activities? "In-flows and out-flows related to production of income from continuing operations". So it says, "All transactions that are not investing or financing". Are what? Operating, so everything kind of falls into this category if it's not investing or financing which are very carefully defined. So for example, collections on sales from customers. As you make a sale, we'll do lots of journal entries, I'm going to debit cash, credit sales. That would be collection from sales. Let's say I collect an account receivable. I might have an account receivable here I'm setting it up. Then later I collect it, debit cash, and credit AR. Collections on sales from customers, payments for cost of goods sold and SG&A. Interest received and paid, circle that. Interest received, interest paid. Interest received, interest paid is what? Operating under GAAP. It's going to be different under IFRS so that's important, but for now let's just study GAAP. Dividends received are also operating because most companies buy stocks, bonds and so on as a normal part of operations with their extra cash. They are just putting the cash somewhere to make money. Acquisition or disposal of trading securities. Payments for taxes. Taxes, normal part of business, operating activity. Payments for taxes, all other receipts and disbursements that do not stem from investing or financing are also operating. So as we go through we are going to be doing a lot of journal entries and basically, if you debit cash that's a cash in-flow, a source. If you debit, let's say you have some kind of expense and we credited cash, that would be an out-flow, cash going out. A statement of cash flows, you know, normally we're doing accrual accounting. Here, let's take accrual and go back to cash. We're going to be doing some reconciling between accrual and cash because we've got to figure out, how much of this transaction was actually cash? Maybe there was interest expense, but it wasn't all cash because some of it was amortization of bond discount or premium, hhmmm. We have depreciation expense but it wasn't cash because it was accumulated amortization. So that's where we have to kind of go through and see what the journal entries were to figure them out. Now, FASB very carefully defines investing activities and financing activities. Investing activities you can think of this, don't give me any lip. So when I talk about lip, what does that mean? That is going to be things like loans, investments and investments like property, plant and equipment, investing in yourself. When we talk about this, PP&E or fixed assets or intangibles, that would be investing. So think of investing as you are investing in the company. You are making an investment in the company or you are making an investment outside the company, buying securities, but you are still investing some money. It says, "Investing principal collections or loans made by the entity," but remember interest and dividends are what? Operating. "Acquisition or disposal of available for sale or held to maturity". Those would be investments.
Views: 21833 Roger CPA Review
IAS 7 Statement of Cash Flows Simple Explanation
 
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A simple explanation of IAS 7 that should give you somewhere to start for an exam question. For free content and ACCA / CIMA courses visit: https://www.mapitaccountancy.com/
Views: 340 mapitaccountancy