Match the type of valuation with the factors used in its calculation. cash flows profit NOPAT

Question

Match the type of valuation with the factors used in its calculation.

cash flows

profit

NOPAT

earnings

total cost of financing

weighted average

cost of capital

EVA

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4 months 2021-10-12T03:03:47+00:00 1 Answer 0 views 0

Match the type of valuation with the factors used in its calculation.

Cash flows :

Cash flows are a liquidity valuation that provides information about the profit the company obtains from activities. The factors used to calculate it is the sum of all the operations cash, capital expenditures, and financing activities.

Profit :

Is the concept used to represent the excess of revenue over all the costs in a company. It is obtained after adding one to the other and differentiating the amounts. The factors that enter this calculation are costs, net sales, and margin of operations.

NOPAT :

Net operating profit after tax is the concept to represent the figure of profit after the payment of taxes. In other words, this is the figure companies end up as revenue after paying taxes.

Earnings

This is the concept to represent the income derived from a certain investment.

The total cost of financing

This is the concept to define the sum of all the costs of financing the operations of the company.

Weighted average

This is the concept to define the calculation of a certain average of the sums included in the operation with a degree of importance for each one.

Cost of capital

This is the concept to define the amount of money required to develop a certain project.

EVA:

This is the concept used to define the economic profit of a company in a certain period measuring the cost of capital, from its operating profit, adjusted for taxes based on cash.

Step-by-step explanation:

Match the type of valuation with the factors used in its calculation.

Cash flows :

Cash flows are a liquidity valuation that provides information about the profit the company obtains from activities. The factors used to calculate it is the sum of all the operations cash, capital expenditures, and financing activities. Cash flow is one of the most important measures of a company as it provides guidance on the company’s capability to make revenue.

Profit :

Is the concept used to represent the excess of revenue over all the costs in a company. It is obtained after adding one to the other and differentiating the amounts. The factors that enter this calculation are costs, net sales, and margin of operations. This is one of the most important measures of a company as it provides guidance in the money the company makes as a total period of operation.

NOPAT :

Net operating profit after tax is the concept to represent the figure of profit after the payment of taxes. In other words, this is the figure companies end up as revenue after paying taxes. This is a measure that allows the user to understand the revenue after taxes but before expenditures, it is not very useful as there are better ratios to measure the effectiveness of the company.

Earnings

This is the concept to represent the income derived from a certain investment. this is the measure that allows the user to understand the capability of the business to make money after the investment.

The total cost of financing

This is the concept to define the sum of all the costs of financing the operations of the company. This a very good measure to understand the costs of the business to perform its activities. It is very good to identify the company’s weaknesses.

Weighted average

This is the concept to define the calculation of a certain average of the sums included in the operation with a degree of importance for each one. This is not a very good indicator for businesses but it is used to find averages from values.

Cost of capital

This is the concept to define the amount of money required to develop a certain project. This is a very good measure to understand the cost and the revenue the project is going to provide. It allows evaluating I it is good to proceed with the investment or not.

EVA:

This is the concept used to define the economic profit of a company in a certain period measuring the cost of capital, from its operating profit, adjusted for taxes based on cash. This measure has to be used with care because many companies might use it to pump its position while it is noted the best to be used to evaluate a companies profitability.