ualitative questions (Lecture content summary) 1. What are the main differences in the way accounting and finance view cash flows? 2. What is Free Cash Flow? From whose perspective is it measured? 3. What is meant by an incremental cash flow? What do you need to ask yourself when deciding whether a cash flow is incremental or not? What types of incremental cash flows are there? 4. What is the logic behind estimating FCF using Formula 1 (FCF = EBIT(1-Tax Rate) + Depr - Capex - Chg NWC + Terminal CF)? Why are the mathematical signs of each variables the way they are? For instance, why is it "+ Depr" and "- Chg NWC"? 5. What are pro-forma financial statements? How are they different to the financial statements you have been learning about so far? 6. Discuss the effect on Free Cash Flow in each of the following situations. Assume that all other things remain constant. a) Increase in capital expenditure b) Increase in inventory storage costs c) Increase in cash d) Increase in time over which capitalized expenses are depreciated e) Now only 60% of NWC is recoverable when a project winds up