0
If a firm has 100 million in revenues Does that mean it has generated a cash flow of 100 million?
Wiki User
∙ 14y ago
Not necessarily. Let's say a company sold services on December 20th, 2009 for $50 million. If they sold these services on account, the journal entry would be:
Accounts Receivable $50 million
Service Revenues $50 million
This company would have $50 million in Revenues but $0 in cash flow for 2009.
If they payment is received in 2010, it would look like this:
Cash $50 million
Accounts Receivable $50 million.
Here they would have (if this is their only entry) $50 million of cash flow and $0 of revenue.
It is the difference between cash and accrual basis accounting.
Wiki User
∙ 14y ago
Not necessarily. Revenues represent the total income generated by a firm from its business activities. However, cash flow refers to the actual cash received or paid out by the firm during a specific period. Factors such as expenses, investments, and accounts receivable or payable can impact the actual cash flow generated by the firm.
Add your answer:
Earn +20 pts
What is 3Com Corporation?
The 3Com Corporation of Santa Clara, California, specialized in data networking equipment and solutions. In 2002, the firm employed 8,165 and generated revenues of $5.4 billion.
How cash flows provides useful information that goes bayond income statment and balance sheet?
Type your answer here... A statement of cash flow shows the actual cash position of a firm. The income statement and the balanced sheet are based on the accrual method and record revenues and expenses as they occur and not when cash changes hands. Thus funds depicted on these statements might not be available to the firm at that time.
How do free cash flows and the weighted average cost of capital interact to determine a firms value?
Free cash flows represent the cash generated by a firm that is available to be distributed to investors. The weighted average cost of capital (WACC) is the average rate of return required by investors in order to finance the firm's operations. By discounting the free cash flows at the WACC, we can determine the present value of those cash flows, which ultimately determines the firm's value. If the present value of the free cash flows exceeds the firm's invested capital, then the firm is considered to have positive value.
When a firm's revenues rise more quickly than its costs?
Hopefully, the firm makes a profit.
A firm uses 1 million in cash to purchase inventories what will happen to its current ratio its quick ratio?
stays the same
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
Can a firm with positive net income run out of cash?
Yes. If the company has debt service (principal payments on loans) that exceed the cash generated from operations, it could also run out of cash. Also, if the company is spending cash on other assets, such as machinery and equipment, or building up inventories, they could be profitable and still run out of cash.
Difference between operating cash flow and net cash flow?
The Operating Cash Flow figure can be found in the top section of the Statement of Cash Flows; this number is simply the total cash flows of the firm for a given period. Whereas the Net Cash Flow figure takes into account deductions for that period, such as capital expenditure, etc. Therefore this number will generally be smaller than the total operating cash flows. The principle is somewhat similar to Total Income and Gross Profit of a firm, e.g: Total Income is the total revenues receieved by a firm during a given period, and Gross Profit is the amount remaining after cost of sales for that period has been dedcuted)
Where are some of the characteristics of a firm with a long cash cycle?
. What are some of the characteristics of a firm with a long cash cycle?
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
What is the liquidity position of the firm?
liquidity position of a firm is the amount of liquid assets ,that is, cash ,bank balance and those assets which can be converted into cash as and when required by the firm which is owned by the firm currently.
In a firm where assets are the major cost how is profit maximized?
By increasing revenues or the cost of the assets.
