Capital Budgeting, M&A, and Valuation Functions of Cash Flow Based Corporate Finance (CFCF) Model

Cash flow based corporate finance (CFCF) model is a model its initiative is cash flows instead of profit. Three functions of the model have been explained in this article. These are capital budgeting, merger acquisition, and valuation. The same four ratios were used for both capital budgeting and merger & acquisition for similarity and complementary reasons. The four ratios used for the capital budgeting and M&A functions are:1. Reinvestment of Cash =Asset Acquisition: CFFO, 2. Depreciation Effect =Depreciation: CFFO, 3. Capital Acquisition =(CFFO- Dividends): Cash Paid for Acquisition, 4. Capital Expenditure = CFFO: Capital Expenditure Two ratios were used to explain the valuation function of the CFCF model. They are: 1. Cash Flow Per Share=Net Cash Flow: Number of Shares, 2. Cash Flow Per Share II = Net Cash Flow from Operations: The Number of Shares Outstanding At the article, an application on the Apple Corp. cash flow statements has been fulfilled.

Keywords: Cash Flow Based Corporate Finance (CFCF) Model, Capital Budgeting, M&A, Valuation, Apple Corp.