Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $ 1 comma 030 Debt $ 410 Equity 620 Next year, there are two possible values for its assets, each equally likely: $ 1 comma 200 and $ 970. Its debt will be due with 4.9 % interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 40 % in the firm's debt and 60 % in its equity will have the same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets. If the assets will be worth $ 1 comma 200 in one year, the expected return on assets will be nothing%. (Round to one decimal place.) If the assets will be worth $ 970 in one year, the expected return on assets will be nothing%. (Round to one decimal place.) The expected return on assets will be nothing%. (Round to one decimal place.)

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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