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Net Income, Cash Flows, Reduced Balance Sheet and WCR (Working Capital Requirements)

Fernandez, Pablo - 2019

The net income of a company in a given year is an arbitrary number which depends on several decisions on the accounting of expenses and revenues. By contrast, each cash flow (money going out of the cash of the company into someone's pocket: shareholders, debt owners...) is a single number not...

Persistent link: https://www.econbiz.de/10012903900

Equity shares equating the results of FCFF and FCFE methods

Ceglowski, Bartlomiej; Podgórski, Bla´zej - In: E-Finanse : finansowy kwartalnik internetowy 8 (2012) 2, pp. 34-43

average cost of capital ; discount rate ; free cash flow ; company valuation ; assessment of investment profitability …

Persistent link: https://www.econbiz.de/10009575858

How do taxes affect investment when firms face financial constraints?

Simmler, Martin - 2012

This study uses a switching regression framework with known sample separation to analyze the effects of corporate income taxation on investment in case of binding and non-binding financial constraints. By employing two different sample splitting criteria, payout behavior and the ratio of...

Persistent link: https://www.econbiz.de/10009580110

Capital supply uncertainty, cash holdings, and investment

Hugonnier, Julien; Malamud, Semyon; Morellec, Erwan - 2011

We develop a model of investment, payout, and financing policies in which firms face uncertainty regarding their ability to raise funds and have to search for investors when in need of capital. We show that capital supply uncertainty leads firms to value financial slack and to adjust their...

Persistent link: https://www.econbiz.de/10009375158

Corporate investment, debt and liquidity choices in the light of financial constraints and hedging needs

Bannier, Christina E.; Schürg, Carolin - 2015

We examine firms' simultaneous choice of investment, debt financing and liquidity in a large sample of US corporates between 1980 and 2014. We partition the sample according to the firms' financial constraints and their needs to hedge against future shortfalls in operating income. In contrast to...

Persistent link: https://www.econbiz.de/10011306337

A Monte Carlo comparison between the free cash flow and discounted cash flow approaches

Akalu, Mehari Mekonnen; Turner, J. Rodney - 2002

One of the debates in the capital budgeting model selection is between the free cash flow and DCF methods. In this paper an attempt is made to compare SVA against NPV model based on Monte Carlo simulations. Accordingly, NPV is found less sensitive to value driver variations and has got higher...

Persistent link: https://www.econbiz.de/10011327539

Evaluating the capacity of standard investment appraisal methods

Akalu, Mehari Mekonnen - 2002

The survey findings indicate the existence of gap between theory and practice of capital budgeting. Standard appraisal methods have shown a wider project value discrepancy, which is beyond and above the contingency limit. In addition, the research has found the growing trend in the use of value...

Persistent link: https://www.econbiz.de/10011327540

Miles-Ezzell's WACC approach yields arbitrage

Löffler, Andreas - 2002 - This version: July 2002

A simple counterexample shows the the widely used WACC approach to value leverage firms developed by Miles and Ezzell can create an arbitrage opportunity. The only consequence to be drawn is that their WACC approach cannot be applied under the circumstances assumed by Miles and Ezzell.

Persistent link: https://www.econbiz.de/10011526007

Corporate policies with permanent and transitory shocks

Décamps, Jean-Paul; Gryglewicz, Sebastian; Morellec, Erwan - 2016

We model the financing, cash holdings, and hedging policies of a firm facing financing frictions and subject to permanent and transitory cash flow shocks. We show that permanent and transitory shocks generate distinct, sometimes opposite, effects on corporate policies and use the model to...

Persistent link: https://www.econbiz.de/10011519080

Capital investments and financial profitability

Baresa, Suzana; Bogdan, Sinisa; Ivanovic, Zoran - In: UTMS journal of economics / University of Tourism and … 7 (2016) 1, pp. 49-59

which the investment project needs to prove its justification, presents an extremely critical factor in the profitability of … period. The aim of this study was to prove that critical factor in achieving profitability is in direct relation with … life does not have to match the profitability or with financial efficiency, and that is not appreciated sufficiently in …

Persistent link: https://www.econbiz.de/10011538568

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