Let’s look at a variable cost example to understand the calculation.Let us assume that a company that manufactures 900 linen shirts daily. To achieve this, the company appoints 45 laborers and pays each laborer $18 for a day’s work. In the variable expense equation, the variable expense is a dependent variable—internal and external factors are […]
Cash flow from assets (CFFA), also known as free cash flow to the firm (FCFF), represents the cash generated by a company’s assets that is available to all its capital providers, including both equity and debt holders. Cash flow from assets (often abbreviated as “CFFA”) refers to the total cash flow generated by a company’s […]
By focusing on high-value, high-growth projects, capital budgeting can help a business achieve its strategic objectives, increase market share, and ultimately enhance profitability. It also helps businesses remain agile by allowing them to adapt to changing market conditions, technological advances, and evolving consumer needs. The amount of cash involved in a fixed asset investment may […]
One of the most dramatic examples of opportunity cost is a 2010 exchange of 10,000 bitcoins for two large pizzas—at the time worth about $41. As of August 2024, those 10,000 bitcoins would be worth over $690 million. While opportunity costs can’t be predicted with total certainty, taking them into consideration can lead to better […]
