Читать книгу Corporate Value Creation - Karlson Lawrence C. - Страница 9

The underlying assumption for the preparation of the material in this chapter is that the reader has limited comfort and experience with the financial statements and the language of business. The chapter begins the education process by creating a general expression for Net Income (NI), followed by a discussion of Earnings before Interest and Taxes (EBIT) and Earnings before Interest, Taxes and Depreciation (EBITDA).

Next the Balance Sheet is used to define Capital Employed (CE) and Return on Capital Employed (ROCE) and then to combine these expressions with the equation(s) developed for Net Income (NI). After a brief discussion of the kinds of Investments a company makes, the Cash Flow Statement is introduced to help define cash flow in terms of Cash Flow from Operating Activities (CFfOA), Cash Flow after Investing Activities (CFaIA), and Cash Generated/Used (CGU).2 Finally the Income Statement is worked backward, so to speak, where an expression is developed that describes the Required Revenue necessary to generate a given level of Net Income using the various components of the Income Statement.