Advice 1: How to calculate discount factor

Discounting is a definition value of future cash flows in real time. The coefficient of discounting shows how much cash we get given the time factor and risks. With it, we convert future value the value at the moment.
How to calculate discount factor
You will need
  • calculator;
  • -knowledge of financial management
Instruction
1
The coefficient of discounting is directly connected with the factors of time and income. It is an indicator reflecting the ratio of future income to their current present value. This ratio helps to determine what should be the percentage increase of income to get the desired result in the future. Allows to predict the dynamics of cash flows.
2
This economic indicator is used in all financial sectors. It is used to determine the economic efficiency of the project or activity specific to your organization. Calculation of cost of capital and cost in business plans is also not complete without this factor. It compares alternative options, determine which is the least costly part of the supply and use of funds.
3
The formula of calculation is as follows: kd=1/(1+d)^nd = rate of discount or discount rate;n = time or number of periods during which you plan to receive the income.
4
Rate discounting is the main constituent element of factor of discounting. It represents the cost of capital. Expected return an investor is willing to invest in this project. Rate discount variable quantity, it is impacted by numerous factors. In each considered case they are different.
5
When calculating the rate can be used the following options: the rate of inflation, the profitability of the alternative project, the cost of credit, the refinancing rate is the weighted average cost of capital, the desired profitability of the project, peer assessment, interest on deposits etc. discount rate is chosen by the person who performs the calculations to determine present value.
6
The coefficient of discount is always less than 1. It determines a quantitative value of one currency unit in the future, subject to the conditions of the calculation.
Note
It is important to determine the discount rate, so that subsequent calculations were the most accurate.

Advice 2: How to calculate the flexibility ratio

On financial stability, we can conclude, knowing about the extent of its dependence on borrowed funds, the ability to maneuver their own capital. This information is important for the owners of the company, its investors, and counterparties (buyers of finished products and raw material suppliers).
How to calculate the flexibility ratio
Instruction
1
In the analysis of financial stability, you can calculate the coefficient of maneuverability on equity. He characterizes the share of sources of own funds located in a mobile form. The flexibility ratio shows what portion of working capital engaged in circulation, and what is capitalized. Thus working capital in a mobile form, the company is free to maneuver.
2
To calculate the flexibility ratio use the following formula:
Km = SOS/SK, where
SOS working capital;
SK – equity.
In other words, the flexibility ratio is the ratio of own circulating capital of the enterprise to private sources of funding. The recommended value for this indicator is 0.5 or higher. Its value depends on the type of activity of the enterprise. In asset-intensive industries to its normal level, usually below, than material-intensive.
3
The amount of equity capital you can see in the third section of the liabilities side of the balance sheet. With regard to the level of working capital, it is a calculated value. You can find one of clubusacasino:
1) SOS = SK ISLANDS, where
SK – equity enterprises;
VA – non-current assets.
2) COC = OA – KO, where
OA – floating assets;
CO – current liabilities of the company.
The indicator defines the share of capital which goes to funding its current operations (the formation of current assets).
4
You have to consider that the dynamics of the flexibility ratio needs to increase. However, its rapid growth is testimony to the normal development of the enterprise. This is due to the fact that the increase in this ratio is possible with the growth of its own working capital or by reducing their own sources of the enterprise. So, the sharp increase of this indicator will automatically trigger a decrease in others, for example, the coefficient of autonomy, indicating an increasing dependence of the enterprise from creditors.
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