Cost of capital is perhaps the most important ingredient in capital budgeting and plays a vital role in evaluation of any investment proposal. It has been defined as the minimum rate of return that a company must earn on an equity financed portion of its investments so that market value per share remains unchanged. In other words, cost of capital [...]
A term closely related to EVA is 'market value added (MVA)'. It is the market value of the capital employed in the firm less the book value of capital employed. MVA is calculated by summing up the paid-up value of equity and preference share capital, retained earnings, long-term and short- term debt and subtracting this sum from the market value [...]
Read this essay to learn about:- 1. Meaning of Funds 2. Uses of Funds Flow Analysis 3. Statement Showing Changes in Working Capital 4. Sources and Applications of Funds 5. Determination of Funds Flow by Incremental Analysis 6. Funds Flow Statement 7. Non-Fund Transactions. Essay # 1. Meaning of Funds: Funds mean working capital. Working capital consists of current assets [...]