Cash flow

Today,we learn about the cash flow.

Cash flow summary:

1.The cash flow identity:(現金恆等式)

cash flow from assets = cash flow ro creditors (bondholders) +cash flow to stockholders (owners)

What it reflect is the fact that a firm generates cash through its various activities, and that cash either is used to pay creditors or else is paid out to the owner of the firm.

2.Cash flow from assets:（源自資產的現金流）involves three components

cash flow from assets = operating cash flow - net capital spending - change in net working capital(NWC)

where,

經營性現金流operating cash flow = earning before interest and taxes(EBIT) + depreciation -taxes

Operating cash flow refers to the cash flow that results from the firm's day-to-day activities of producing and selling.Expenses associated with the firm's financing of its assets are not included since they are not operating expenses.Operating cash flow is an important number because it tells us,on a very basic level,whether or not a firm's cash inflows from its business operation are sufficient to cover its everyday cash outflows.For this reason,a negative operating cash flow is often a sign of trouble.

To calculate operating cash flow(OCF),we want to calculate revenues minus costs,but wo don't want to include depreciation since it's not a cash outflow,and wo don't want to include interest because it's a financing expense.We do want to include taxes,because taxes are,unfortunately, paid in cash.

資本性支出net capital spending = ending net fixed assets - beginning net fixed assets + depreciation

Net capital spending is just money spent on fixed assets less money received from the sale of fixed assets.

淨營運資本的變化change in NWC = ending NWC - beginning NWC（nwc = current assets - current liabilities）

3.cash flow to creditors (bondholders)流向債權人的現金流

cash flow to creditors = interest paid(給) - net new borrowing（收）

4.cash flow to stockholders (owners)流向股東的現金流

cash flow to stockholders = dividends paid（給） - net new equity raised（收）