Financial Statement Analysis 4

Financial Statement Analysis 4

• How the dividend discount model works (or does not work)
• How a constant growth model works
• What is meant by cash flow from operations
• What is meant by cash used in investing activities
• What is meant by free cash flow
• How discounted cash flow valuation work
• Problems that arise in applying cash flow valuation
• Why free cash flow may not measure value added in operations
• Why free cash flow is a liquidation concept
• How discounted cash flow valuation involves cash accounting for operating activities
• Why “cash flow from operations” reported in U.S. and IFRS financial statements does not measure operating cash flows correctly
• Why “cash flows in investing activities” reported in U.S. and IFRS financial statements does not measure cash investment in operations correctly
• How accrual accounting for operations differs from cash accounting for operations
• The difference between earnings and cash flow from operations
• The difference between earnings and free cash flow