Discretionary Cash Flow

AAA

DEFINITION of 'Discretionary Cash Flow'

Discretionary cash flow is any money left over once all possible capital projects with positive net present values have been financed, and all mandatory payments have been paid. The capital can be used to pay for other responsibilities such as giving out cash dividends to stockholders, buying back common stock and paying off any outstanding debt.

INVESTOPEDIA EXPLAINS 'Discretionary Cash Flow'

How discretionary cash flow is distributed is the responsibility of management. They decide how to use the funds to benefit the company the most. The way these funds are allocated can have huge affects on the performance of the company, and as a result the evaluation of the effectiveness of management.

RELATED TERMS
  1. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  2. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  3. Discretionary Income

    The amount of an individual's income that is left for spending, ...
  4. Disposable Income

    The amount of money that households have available for spending ...
  5. Working Capital

    This ratio indicates whether a company has enough short term ...
  6. Promotional CD rate (Bonus CD rate)

    A limited-time offer of a higher rate of return on a certificate ...
Related Articles
  1. Digging Out Of Personal Debt
    Credit & Loans

    Digging Out Of Personal Debt

  2. Intangible Assets Provide Real Value ...
    Markets

    Intangible Assets Provide Real Value ...

  3. Which is a better measure for capital ...
    Budgeting

    Which is a better measure for capital ...

  4. What are the disadvantages of using ...
    Options & Futures

    What are the disadvantages of using ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center