cash flow

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cash flow,

n the reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extraordinary charges to reserves, which are bookkeeping deductions not paid out in actual dollars and cents. A measurement tool used in recent years to offer a better indication of the ability of a company to pay dividends and finance expansion from self-generated cash than the conventional reported net income figure.
References in periodicals archive ?
The valuation courses I took in grad school also focused on discounted cash flow models.
The broad range of stochastic prices is the consequence of the broad range of likely lifetimes and the fact that the present value of cash flows decreases rapidly as lifetime until death increases.
This will decrease the net cash flow and therefore reduce the return on the investment.
The statement goes on to explain that quoted market prices in active markets are superior to other valuation techniques, including the present value of future cash flows, (discounted in this step at a rate commensurate with the risk involved), option-pricing models, matrix pricing, option-adjusted spread models, and fundamental analysis.
Our analyses of 100-plus corporations indicate that an untapped 20 percent of market capitalization resides in the balance sheet, within those areas of operational excellence (such as inventory turns and Dso) that determine capital efficiency and free cash flows.
The goal is to understand the unknown market mechanism that uses predicted future cash flows to create the observed market value.
Cash flows are geographically concentrated in Brazil (rated 'BB', with a Positive Outlook by Fitch) and more generally in Latin America.
On a similar note, packaging future life insurance company cash flows and selling them to the capital markets (life insurance securitizations) is creating a marketable security for the investor while raising capital for the insurer.
Additionally, the company is looking to possibly divest some assets in Europe and Brazil, which would bolster cash flows in the near to intermediate term if completed.
To date, neither text writers nor analysts have developed ratios for effective evaluation of the statement of cash flows.