Cash Flow: The

Cash Flow: The Company as a Rate Saleable Assets as a going concern requires a professional and technical scaffolding that integrates the various components that make up the reality of conveniently grouped assets to produce certain cash flows. Dr. Carlos E. Spina, author of the book "a company is really worth much and with whom we have collaborated on more than one opportunity in this exciting problem, we introduce in this work in this very necessary and thrilling. Assuming we all know that the company has launched a value, we will discuss in a simple way how to determine that value. There are many methods, some simple and others complex, but not its complexity that determines the method, but this must be adapted to the particularities of the property you want to value. The first approach is the book value, ie equity. This involves thinking that the value of the company is the algebraic sum of assets and liabilities, valued in accordance with professional standards.It seems obvious that this method does not cover many aspects associated with the formation of value, as we shall see. If we add some sort of improvement to the method mentioned above, we might assume that all of the assets involved is not necessary to develop the business in question, to be more clear, there may be obsolete or worthless assets to achieve the intended purpose for which it is necessary after the value of the company, the remaining assets, are called substantial, ie those which are essential. These assets may be valued at market value. In all fairness the reader may be thinking at this point that the value so determined, it lacks one ingredient, which is precisely what is technically known as goodwill, which is defined as the ability to obtain superutilidades or profits above the normal value .For example if we have a certain amount of money we can put it on a fixed term, but if we invest in a business likely will get a higher return, but with an additional risk factor. Not go into detail how to obtain technically this goodwill, although there are ways to do this, however we want to emphasize something. In many types of business goodwill that is known or at least fairly determined by market forces, so try to use any method is useless because it sends the supply and demand. This is not unusual and serves as a simple business maxiquiosco, whose level of billing and location determine its value, you add the assets involved (goods, facilities, other assets, etc.) and also applicable to more complex business, such as farms, where the area will determine the type of operation, and render it probable, with a known market and quite transparent.If we have this situation, the method used is the "Multiple price-earnings ratio" or some variant. The method is simple and effective if given the right circumstances to apply, for example, suppose the expected gain of a particular business is 10 and the average price / earnings ratio of the sector is 20, we can determine the price so that if Price / Earnings 20, knowing that the gain is 10, clearing the price would PRICE / 10 20, so the PRICE 20 x 10 200. Of course this is not always usable by the other methods to be used. Under these circumstances, the method used is called the Present value of future cash flows. Briefly discuss the method and its foundations. Any investment project has a value that is determined by the cash flows generated. What are the cash flows So easy cash are funds that are released through the life of the project.We can not go into detail about how to develop a flow of funds, but basically we could say that is the algebraic sum of the results, depreciations and other charges that do not represent the movement of funds, fewer investments, plus or minus the change in working capital, less the income tax. The reason is simple, the release of funds is what you can spend or invest in new projects. So, if we adopt the method, the first thing to do is to estimate future cash flows that will generate business. This task has a primary complex, which is precisely the method of estimation, since in reality is the expectation of what will happen thereafter. This may be at risk (defined as a probability of change of expectations) or directly under uncertainty (total ignorance of the evolution of the variables or expectations).In general, the first thing be estimated are the company's future results, for which it should determine the future sales, costs and expenses. There are different methods methods, some statistics to estimate the evolution of any variable, such as sales. In general, given the future development of sales, other variables, are somehow dependent on these (this is in general terms, it may be that the variable determining the evolution of the other may be, for example, shopping) . The costs and expenses are generally dependent on them. However, we must take into account the costs which are fixed and which are the variables, since any increase in sales will result in a leveraged return for the use of fixed cost components. Thereby determining the expected result, we must estimate the change in working capital, primarily receivables, inventories and trade payables.The increase in working capital, determine a reduced flow of funds available, while the same increase its reduction. Then be evaluated investment in fixed assets, which will be required to obtain such funds. Here we introduce a normal question, when doing an appraisal.

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