Performance evaluation, Financial Management

Performance evaluation

One can determine this by comparing the cash flow from assets and cost of capital.

1. Cash flow from assets

Cash flow from assets is calculated as Operating Cash flow - Net Capital Spending - Change in NWC.

        1. Operating Cash flow

            Operating Cash flow = Earnings before interest and taxes + depreciation - taxes

        2. Net capital spending 

            Net capital spending is money spent of fixed assets less money received from the sale of fixed assets.
           Net capital spending = Ending net fixed assets - Beginning net fixed assets + Depreciation

        3. Change in Net working capital

           Net working capital is difference between current assets and current liabilities. Change in net working capital is the difference            between net working capital between two years. 

Posted Date: 7/26/2012 3:55:35 AM | Location : United States

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