FCFL
FREE CASH FLOW: A TOOL TO MANAGE YOUR BUSINESS MORE EFFECTIVELY
The purpose
of this course is to provide accounting and financial professionals with
a firm understanding of what free cash flow is, and how it can be used
as a financial metric to make better business decisions.
Major
topics include:
- Explains how free
cash flow is calculated using the GAAP financial statements, and why
it is a superior financial metric to net income, EBITDA, and cash flow
from operations.
- Discusses the interrelationship
between free cash flow, return on investment, and cost of capital, and
why this interrelationship is important in determining whether shareholder
value has been created.
- Explains how the
weighted average cost of capital is calculated for a company. How is
the capital asset pricing model used to determine the cost of equity
capital, and why should the cost of capital be looked at as an "opportunity
cost"?
- How can free cash
flow be used as a tool for evaluating capital budgeting decisions, and
what are the issues and concerns to be faced in projecting future free
cash flow?
- Describes some
of the pitfalls in trying to use free cash flow to evaluate short-term
financial results. What is "modified" free cash flow, and how can its
use circumvent those pitfalls? What is the difference between modified
free cash flow and traditional free cash flow?
- Discusses how free
cash flow can be used to evaluate acquisition opportunities, and what
the most important considerations are in determining whether an acquisition
will create value for the acquiring company. The discussion will include
the importance of "synergy value" and why many acquisitions that are
undertaken eventually fail.
- What are the key
issues and potential problems to be faced in implementing a free-cash-flow
management program within an organization, and how can these issues
and problems be overcome?
Level
of knowledge: Intermediate
Field
of study: Management Advisory Services
|
