Discretionary cash flow

Discretionary cash flow

Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on.

Discretionary Cash Flow

The cash flow available to a company after its capital expenditures have been financed to their net present value and after all liabilities, such as employee wages and others, have been paid. The discretionary cash flow may be used to pay dividends to shareholders, to provide bonuses to executives, or for any number of other purposes.
References in periodicals archive ?
The capital program is designed to enhance shareholder value by delivering attractive margins and returns, while advancing the development of the company's core assets within discretionary cash flow.
We expect next year's capital expenditures to be inside of discretionary cash flow at $50 and $3, while generating free cash flow of more than $700 million at the current strip.
FYE* 2011 revenue exceeded $146,000 with owner/operator's discretionary cash flow more than $30,000.
The firm reported cash flow from operating activities in the second quarter of 2011 at USD1.837bn, and discretionary cash flow totalled USD1.838bn.
The upgrade factors in the significant slowdown in advertising revenue declines coupled with continuous cost-cutting efforts that have increased the company's EBITDA more than three times to USD174m in the first six months of 2010 and strengthened discretionary cash flow to over USD100m in the period, S&P noted.
Doubts on whether the current moderating revenue trends are sustainable into 2011 are somewhat eased by the clear signs for the US economic rebound, as well as by the company's improved credit measures and discretionary cash flow generation over the last 12 months, the agency added.
Discretionary cash flow to shareholders is normally calculated as follows: earnings before interest, taxes, depreciation and amortization (EBITDA) less income taxes on EBITDA, capital expenditure requirements (net of the related income tax shield) incremental working capital requirements, and debt servicing costs (interest expense net of tax and changes in principal).
Shareholder value is created when the discretionary cash flow to shareholders that's generated from invested equity exceeds the required rate of return on equity.
The company posted a discretionary cash flow for the third quarter of 2009 at USD7.6m and net income of USD6.4m.
During January to September 2009, the company posted a discretionary cash flow at USD50m and net income loss, as adjusted, at USD27.5m.
* Consistency in inflation and other assumptions embedded in the discretionary cash flow projections
McSpirit also sees the non-productive capital spending rising from no change previously and free cash flow estimates for FY19 falling "materially' on higher spending and lower discretionary cash flows. The analyst keeps his Market Perform rating on Diamondback Energy, stating that he wants to see how the synergy and productivity gains materialize in the combination.