How a change in Operating Current Assets, ceteris paribus, impacts Price Per Share

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How a change in Operating Current Assets , ceteris paribus , impacts Price per Share

A change in Operating Current Assets , ceteris paribus , impacts Price per Share in terms of affecting the that will trigger all the other changes until the market price is affected . The operating working capital (NOWC ) and Net PPE or Net Plant Property and Equipment . This means that as one increases the net operating working capital , the The resulting in turn determine the change in the said

account and any increase in the account therefore the increase in operating current assets , the greater will be in amount of investment in capital

To determine the market price per share of a stock there is need to get the amount to the number of outstanding shares . To get the value of the corporation there is a need to find the value of operations and the value of non-operating asset . In to get the value of operations there is need to determine the value of free cash flows (FCF . To get value of the FCF , there is a need to have the value of net operating profit after tax (NOPAT ) and deduct from the same , the amount of investment in capital that was derived earlier as a function of changes in Operating Current Assets

Therefore it could be concluded that the higher the amount of net operating current assets , the greater would be the amount of investment in capital , and the less would be the amount of free cash flow . The less amount of free cash flow , the less would be the amount of value of operations , and the less would be the value of equity and finally the less would be value of market price per share of a stock . In simple terms , it means that increasing operating current assets is an investment that would involve use of funds and therefore would decrease free cash flow that would lower of the value of corporation . Lowering the value of the corporation , lowers value of equity and market price per share of stock Work Cited

Brigham and Houston , Fundamentals of Financial Management , Thomson South Western , US , 2002

Brigham and Houston , Fundamentals of Financial Management , Thomson South Western , US , 2002

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