About This Chapter
Capital Investment Decisions -- Chapter Summary and Learning Objectives
Businesses and investors use many different techniques to gauge the value of proposed projects or capital investments. Our experienced instructors take you through the process of analyzing the numbers with multifaceted lessons that are designed to increase your comprehension and retention of the material. This chapter covers the following topics:
- Project cash flow
- The stand-alone principle
- Pro forma financial statements
- Net working capital
- Book value and market value
- Operating cash flow
|Project Cash Flow: Analysis & Examples||Learn about the stand-alone principle and relevant cash flows.|
|Pro Forma Financial Statements & Project Cash Flows||Explore net working capital, capital spending, and project cash flows.|
|The Effects of Depreciation on Cash Flow||Study net working capital cash flows and depreciation as well as book value versus market value.|
|Operating Cash Flow: Definition & Examples||Discover the three approaches to the calculation of operating cash flows.|
1. Project Cash Flow: Analysis & Examples
When a company is considering a new project or investment, it must have some method to evaluate whether to proceed. In this lesson, you'll learn how relevant cash flows can help with this decision.
2. Pro Forma Financial Statements & Project Cash Flows
In this lesson you'll learn about pro-forma financial statements and how to estimate specific line items on the balance sheet, income statement, and statement of cash flows. We'll also discuss the difference between pro forma and GAAP.
3. The Effects of Depreciation on Cash Flow
Businesses depend on having cash to meet expenses. Large purchases tend to be deducted on taxes over a period of years rather than just the year of purchase. We will discuss how depreciation for tax purposes affects a business' cash flow.
4. Operating Cash Flow: Definition & Examples
In this lesson we will learn about operating cash flow. We will explore ways that businesses use operating cash flow to manage their business, and see three different approaches to calculating it.
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Other chapters within the Finance 101: Principles of Finance course
- Introduction to Corporate Finance
- Financial Statements, Taxes & Cash Flow
- Financial Statement Basics
- Long-Term Financial Planning & Growth
- Introduction to Valuation Methods
- Discounted Cash Flow Valuation
- Interest Rates & Bond Valuation
- Stock Valuation
- Net Present Value & Investment Basics
- Accounting Risk & Return
- Return, Risk, & the Security Market Line
- Options & Corporate Finance
- Cost of Capital
- Financial Leverage & Capital Structure
- Dividends & Dividend Policy
- Short-Term Financing & Planning
- Cash & Liquidity Management
- Credit & Inventory Management
- International Corporate Finance
- Studying for Finance 101