Learn about the role of depreciation and capital expenditures in projected cash flow.
- [Instructor] Next, let's take a look…at depreciation and capital expenditures.…I'm in the exercise file labeled 04_03 Begin.…Remember that depreciation is a non-cash expense.…We need to add it back to calculate free cash flows.…Once you calculate EBIAT,…you can simply add the amount back.…Let's create another row for depreciation.…I'm going to do that on row 40.…And in row 41 I'm going to create another label…for capital expenditures, and just call it CAPEX.…
The depreciation values, I can just get from row nine.…I'm going to copy those over into the depreciation.…That's easy enough.…It copied the grid lines over, but that's okay.…No problem.…It's not really going to change anything.…Next, we'll take into account cash inflow…and outflow for capital expenditures.…Remember that this refers to when cash…is actually paid for property and equipment,…regardless of when the depreciation…is recognized on the asset.…If the business sells an asset during the period,…the cash inflow would also be included in the calculation.…
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- Explain the four different types of financial statements.
- Distinguish between the types of moving averages.
- Determine a seasonal adjusted trend.
- Break down pro-forma financial statements.
- Identify cash flows, and what increased liabilities and decreased earnings generally indicate.
- Tell what a regression is.
- Outline the naive approach.