CASH FLOW PER SHARE Definition

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CASH FLOW PER SHARE is a good measure of a firm's financial strength. Analysts put more weight on cash flow per share than earnings per share because EPS is more easily manipulated, its reliability can at times be questionable. Cash is almost impossible to falsify, i.e. you either have cash or you don't. Cash flow per share is a useful measure for the strength of a firm and the sustainability of its business model. The formula:

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STARTUP COSTS or Organization Cost, in the U.S., is when a new corporation is created, the costs associated with the formation are not deductible. An election must be made to amortize organizational costs no later than the due date (including extensions) of the return for tax year in which the active trade or business begins. If an election is not made to amortize these costs, they must be capitalized on the books and are not subject to amortization resulting in permanent capitalization. Upon making the timely election, the corporation may recover these costs through amortization deductions over a 60 month period. Organizational expenditures include any expenditure which is:

  • incident to the creation of the corporation,
  • chargeable to capital account, and 
  • is of a character which, if expended incident to the creation of a corporation having a limited life, would be amortizable over such life.

The following are examples of organization costs:

  • legal services incident to the organization of the corporation, such as drafting the corporate charter, by-laws, minutes of organizational meetings, terms of original stock certificates, etc.
  • necessary accounting services.
  • expenses of temporary directors and of organizational meetings of directors or stockholders.
  • fees paid to state of incorporation.

FRN see FLOATING RATE NOTE.

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