FUNDS FLOW Definition

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FUNDS FLOW is the funds generated from operations; normally expressed as cash flow from operations or working capital from operations.

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INCREMENTAL COST OF CAPITAL is the weighted cost of the additional capital raised in a given period. Weighted cost of capital, also called composite cost of capital, is the weighted average of costs applicable to the issues of debt and classes of equity that compose the firm's capital structure. Also called marginal cost of capital.

RETURN ON ASSETS (ROA) shows the after tax earnings of assets. Return on assets is an indicator of how profitable a company is. Use this ratio annually to compare a business performance to the industry norms: The higher the ratio the greater the return on assets. However this has to be balanced against such factors as risk, sustainability and reinvestment in the business through development costs. 

Higher ROA is better, but extremely high ROA may be an indicator of vulnerability as to any sustainable competitive advantage.

Formula: Earnings After Tax (EAITDA) / Total Assets

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