Financial Management
Economic Value Added (EVA) is a financial performance metric that calculates the value a company generates from its operations, after deducting the cost of capital. EVA is used to assess whether a company is creating wealth for its shareholders by generating returns greater than its cost of capital.…
Market Value Added (MVA) is a financial metric that measures the difference between the market value of a company and the total capital invested by its shareholders and debt holders. MVA reflects how much value a company has created or destroyed over time, offering insight into its performance and the effectiveness of its management.…
Market Value Added (MVA) and Economic Value Added (EVA) are two key financial performance metrics used by companies and investors to assess the value created by a business. Both measures focus on value creation but from different perspectives. MVA looks at a company’s market value compared to its invested capital, while EVA focuses on whether a company is generating returns that exceed its cost of capital.…
Free cash flow (FCF) is a critical metric for assessing a company’s financial health, representing the cash available after a company has covered its capital expenditures (CapEx). Calculating free cash flow is essential for investors, managers, and analysts to evaluate how much cash a company can use for business expansion, paying off debts, or returning value to shareholders.…
Free cash flow (FCF) is a key financial metric that measures the cash a company generates after accounting for capital expenditures (CapEx) required to maintain or expand its asset base. It represents the cash that a company can freely use for various purposes, such as paying dividends, repaying debt, or investing in growth opportunities.…
Net Operating Profit After Taxes (NOPAT) is a key financial metric that measures a company’s profitability after accounting for taxes but before accounting for non-operating items like interest expenses and income from investments. It is commonly used to assess the core operating performance of a business, excluding the effects of its financing structure.…
Operating assets and operating capital are critical concepts in financial management that focus on the assets and resources a business uses to generate its revenue. Proper management of these elements is essential for maintaining liquidity, supporting day-to-day operations, and ensuring long-term business success.…
In business, accounting data serves as the foundation for decision-making. However, the raw accounting information needs to be adjusted and modified to meet specific managerial needs. Modifying accounting data for managerial decisions ensures that financial information is relevant, timely, and aligned with the strategic goals of the organization.…
The statement of cash flows is a financial statement that provides a detailed breakdown of a company’s cash inflows and outflows over a specific period. It helps users understand how a company generates and uses cash through its operating, investing, and financing activities.…
Net cash flow is a crucial financial metric that represents the total cash generated or used by a business during a specific period. It helps assess a company’s liquidity, operational efficiency, and its ability to meet financial obligations. This article explores the definition, importance, calculation, and applications of net cash flow in business operations.…