Home › Finance Formulas › Gdp Formula › Sustainability Ian Fiscal Policy Once Again Corrective Gdp Formula While The Average Response Measure Debt Was Basis Points Over Gross Whats Domestic Product Meaning Explained Are

Finance Formulas / July 13, 2018 / Aniyah Booth

The cash ratio is most commonly used as a measure of company's liquidity. The metric calculates a company's ability to pay current liabilities using only cash and cash equivalents on hand. If the company is forced to pay all current liabilities immediately, this metric shows the company's ability to do so without having to sell or liquidate other assets.

There are many variations when it comes to what you can use for your cash flows and discount rate in a DCF analysis. For example, free cash flows can be calculated as operating profit + depreciation + amortization of goodwill - capital expenditures - cash taxes - change in working capital. Although the calculations are complex, the purpose of DCF analysis is simply to estimate the money you'd receive from an investment and to adjust for the time value of money.

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