What is the difference between total receipts and total payments is referred to as?

The correct answer to the given question is option b. net cash flow.

When constructing pro forma financial statements which of the following steps should be completed first?

1) compute other expenses, 2) determine a production schedule, 3) establish a sales projection, 4) determine profit by completing the actual pro forma statement.

Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?

the cumulative loan balance plus the ending cash balance. Which of the following is most likely to increase the final number for notes payable for short-term borrowing needs in the pro forma balance sheet? A decrease in inventory.

What is proforma financial statement?

A pro forma financial statement leverages hypothetical data or assumptions about future values to project performance over a period that hasn’t yet occurred. In the online course Financial Accounting, pro forma financial statements are defined as “financial statements forecasted for future periods. … Income statements.

When developing pro formas you should start with what?

To start creating a pro forma statement, begin with an income statement from the current year. Know where you stand from a current cash perspective. Step 1: Calculate revenue projections for your business.

Why is amortization added back to cash flow?

Amortization expense refers to the depletion of intangible assets and can be a major source of expenditure on the balance sheet of some companies. Amortization is always a non-cash expense. Therefore, like all non-cash expenses, it must be added back to net earnings while preparing the indirect statement of cash flow.

Which of the following would not be considered as a current asset?

The correct answer is c) Land used in daily operations.

Which of the following is not a primary source of raising money or capital for the firm?

Correct answer: Option A) Assets. Explanation: Assets are not a primary source of capital to the firm because a firm needs capital to invest in the…

What is called cash from operation?

Cash flow from operating activities (CFO) indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers.

Does amortization affect net income?

Annual amortization expense reduces net income on the income statement, which also reduces retained earnings in the stockholders’ equity section of the balance sheet. Net income equals revenue minus expenses. … For example, a $200 annual amortization expense would reduce net income by $200 on the income statement.

How do you reduce goodwill in cash flow statement?

Reduction in goodwill is a non-cash item that is debited to statement of profit and loss. Hence in cash flow statement, it shall be added back to net profit so as to arrive at the cash flow from operating activities.

What is the difference between OCF and Ebitda?

Earnings before interest, taxes, depreciation and amortization or just EBITDA is a kind of operating income which excludes all non-operating and non-cash expenses. … The difference between EBITDA and OCF would then reflect how the entity finances its net working capital in the short term.

What does EBIT stand for?

Earnings before interest and taxes
Earnings before interest and taxes (EBIT) is a common measure of a company’s operating profitability. As its name suggests, EBIT is net income excluding the effect of debt interest and taxes. Both of these costs are real cash expenses, but they’re not directly generated by the company’s core business operations.

What are non-cash expenses?

A non-cash charge is a write-down or accounting expense that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows.

What is CFO EBITDA?

One ratio that can help in spotting such companies is CFO to EBITDA (earnings before interest, taxes, depreciation and amortisation). … A CFO to EBITDA ratio of significantly less than one for an extended period can mean that the company is not able to translate its profits on books into cash profits.

Is CFO the same as EBITDA?

EBITDA takes an enterprise perspective (whereas net income, like CFO, is an equity measure of profit because payments to lenders have been partially accounted for via interest expense).

Does EBITDA equal cash flow?

Keep in mind the EBITDA does not equal cash flow. … EBITDA is, and will probably always be, the key business metric for evaluating the performance of a business to its peer group because it is widely used and easy to perform.

What is the difference between FCF and FCFF?

Difference Between FCFF vs FCFE. FCFF is the cash flow available for discretionary distribution to all investors of a company, both equity and debt, after paying for cash operating expenses and capital expenditure. … FCFE is the discretionary cash flow available only to equity holders of a company.