IDEAS home Printed from https://ideas.repec.org/h/pal/pmschp/978-1-137-56142-8_4.html
   My bibliography  Save this book chapter

Measuring the Cash Flows of Banks: The FCFA Asset-Side Approach

In: Valuing Banks

Author

Listed:
  • Federico Beltrame

    (University of Udine)

  • Daniele Previtali

    (Luiss Guido Carli University)

Abstract

According to the theoretical framework of the AMM, we consider the free cash flow from asset measurement. In particular, we propose a valuation framework which splits bank cash flows into those originating from assets and those from liabilities. Specifically, the most important assumption is that bank debt is considered as a financial liability. This has several implications for the balance sheet, income statement and cash flow reclassifications. For those reasons, we develop a new model for reclassifying a bank’s financial statements in order to obtain a measure of free cash flow from assets. In addition, we reconcile the latter to the free cash flow to equity, taking into account the overall debt financial operations. Such a model reconstruction is very important, as all the current literature directly estimates a cash flow to equity without reconciling it to a cash flow from operations. Our model tries to close this gap in the literature. Besides, in Chap. 3 we proposed a solution to the problems related to the net working capital and capital expenditures estimation of banks. After having discussed the free cash flow model in theory, we propose the application of the free cash flow from assets to a real case.

Suggested Citation

  • Federico Beltrame & Daniele Previtali, 2016. "Measuring the Cash Flows of Banks: The FCFA Asset-Side Approach," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Valuing Banks, chapter 4, pages 83-109, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-1-137-56142-8_4
    DOI: 10.1057/978-1-137-56142-8_4
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:pmschp:978-1-137-56142-8_4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.