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1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
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Why are cash flows of more interest than income to the treasury manager?
because it is important than cash flows
What is the importance of the cash flow statement?
The statement of cash flows is a summary of the major cash receipts and cash payments for a period. This is important to a business to help them know where cash is going out to and where it is coming from and the amounts. This gives a more detailed account of cash in a company.
What is role of cash Flow Statement?
Cash flow statement means the cash inflow and outflow from business due to operating, financing and investing activities.
Identify the cash flows available to an investor in stock. How reliably can these cash flow be estimated?
Some cash flows that are available to a stock investor include dividend payments and the cash flow that he can get upon the sale of the stock. Dividends are more suitable in the long run.
Why is it inappropriate to use one yield in discounting all cash flows in a financial asset?
There are different cash flow patterns. Each cash flow should be discounted at a unique rate appropriate for the time period in which the cash flows will be received to get a more accurate bond price.
Depreciation is a critical component of the statement of cash flows Do you agree Why?
Depreciation is a non-cash adjustment and only appears in the statement of cash flows when transitioning between operating income and cash flow from operations. Depreciation is no more or less critical in a cash flow statement than any other adjustments for non-cash items.
What is conventional projects?
A project with a negative initial cash flow(cash out flow),which is expected to followed by one or more future positive cash flows(cash inflows) is called conventional project.
What are the components found in cash flow statement?
following items are included in cash flow statement1 - cash flow from operating activities2 - cash flow from investing activities3 - cash flow from financing activities.
What are the major advantages of the indirect method of reporting cash flows from operating activities?
the advantage is that it focuses on the differences between net income and net cash flows from operating activities. Meaning, it makes it more useful to relate the statement of cash flows and the income statement and balance sheet. Also it is less costly to change net income to net cash flow from operating activities.
Advantages of capital from profits?
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When performing a cash flow analysis the is the sum of the positive and negative cash flows?
Cash flow analysis is the study of cash inflows and outflows from which activities company received how much cash inflows as well as how much cash outflows from business. If cash inflows more than cash outflows there will be more closing balance of cash then openening balance of cash.
What is cash flow statement?
Considering what is cash flows statement? This statement is one of the three main financial statements any business has to prepare, i.e. balance sheet, income statement and cash flows statement. Cash flows statement indicates what are the sources from which business receives cash and what are the main uses of cash. Statement of cash flows is a very important, as it indicates whether the business is able to generate cash from it's main activities, whether there is no excessive borrowing, how the business uses cash generated. The other financial statements (income statement and balance sheet) do not provide such information. Also knowing what is cash flows statementallows you to compare net profit reflected in the income statement and change in cash for the same period and estimate quality of net profit and determine whether the business has enough cash. In certain cases it might happen that based on the income statement the business is profitable, however it has no cash. More detailed information can be found on http://free-accounting-tutor.com/
