Metric Definitions & Qualifiers
e Cash Flow = ‘Cash In’ Minus ‘Cash Out’
— Calculated on a cash basis (which excludes changes in non-cash accrual of future liabilities) for simplicity.
e One-Time Expenses = ‘Spending Minus Repayments’ for Non-Recurring Programs
— Net costs of programs such as TARP, ARRA, and GSE bailouts.
e Net Worth = Assets Minus Liabilities Minus Unfunded Entitlement Liabilities — Assets include cash & investments, taxes receivable, property, plant & equipment (as defined by Department of Treasury). — Liabilities include accounts payable, accrued payroll & benefits, federal debt, federal employee & veteran benefits payable... — Unfunded Entitlement Liabilities include the present value of future
expenditures in excess of dedicated future revenues in Medicare and Social Security over the next 75 years.
Note: USA Inc. accounts do not follow the same GAAP as corporations. i USA Inc. | High Level Thoughts 33
Common Financial Metrics Applied to USA Inc. in F2010
e Cash Flow Per Share = -$4,171
— USA Inc.’s F2010 cash flow -$1.3 trillion, divided by population of ~310 million (assuming each citizen holds one share of USA Inc.).
e Net Debt to EBITDA Ratio = -8x
— USA Inc. net debt held by public ($9.1 trillion) divided by USA Inc. F2010 EBITDA (-$1.1 trillion). It’s notable that the ratio compares with S8&P500 average of 1.4x in 2010.
Note: USA Inc. accounts do not follow the same GAAP as corporations. Refer to slide 31 for a word of warning about comparing corporate and government accounting. EBITDA is Earnings Before Interest, Tax, Depreciation & Amortization. Source: Dept. of Treasury, White House Office of Management and Budget, Congressional Budget Office, BEA, BLS. www.kpcb.com
USA Inc. | High Level Thoughts 34
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