MGT338H5 Lecture : Class 2 Notes
Document Summary
Class 2 - accounting statements and cash flow. Expenditures: fill in all the ??? in the balance sheet above, and find the cash balance on december 31, calculate the: operating cash flow = ni + dep. Inc. ar - inc. inv + inc. ap + i(1-t: calculate the total cash flow = free cash flow (fcf) = operating cash flow capital, verify that cash account = fcf financial cash flows. Financial markets enable financial managers to: compare a proposed investment with alternatives, to trade future dollars for dollars now and vice versa. Tom: earning 100,000 this year (now) but only needs 50,000. Leslie: earning 100,000 this year (now), but wants to spend 150,000. Leslie borrows 50,000 from tom and agrees to pay him 55,000 in 1 year. Case 1: suppose the financial markets provide a better alternative. Then the company would not accept the project.
