Why do we focus on cash flows instead of profits, Financial Management

Assignment Help:

Why do we focus on cash flows instead of profits when evaluating proposed capital budgeting projects?

We focus on cash flows at the place of profits when evaluating proposed capital budgeting projects because it is cash flow that changes the value of a firm.  You can spend cash but you can't spend profit. 

 


Related Discussions:- Why do we focus on cash flows instead of profits

What are the factors determining the cost of capital, What are the Factors ...

What are the Factors determining the cost of capital There are many factors which impact the cost of capital of any company.  This would mean that cost of capital of any two co

Calculate the confidence interval of returns, Following are return expectat...

Following are return expectations on the S&P 500 index for the upcoming year with the corresponding probabilities: Expectation                                   Return

How to calculate rate of return?, Illustration Consider a Rs.1,00...

Illustration Consider a Rs.1,000 par value bond whose current market price is Rs.850. The bond carries a coupon rate of 8% and has a maturity period of 9 years. Wha

Day count convention, Day count convention is a system used to determ...

Day count convention is a system used to determine the number of days between two coupon dates. It is important in calculating accrued interest and present value

Services of an overseas factor, Several overseas factors are subsidiaries o...

Several overseas factors are subsidiaries of UK banks or their agents who offer facilities to companies with export credit sales usually of above £0.25m. Overseas factors carry out

Criticism of wealth maximization, Q. Criticism of Wealth Maximization? ...

Q. Criticism of Wealth Maximization? i) The objective of wealth maximization is not, necessarily, socially desirable. ii) There is some controversy whether the objective of

#title.OPERATING CYCLE, DISCUSS THE APPLICABILITY OF OPERATING CYCLE IN VEG...

DISCUSS THE APPLICABILITY OF OPERATING CYCLE IN VEGETABLE GROWING.

Find the nominal rate of interest, (a) Find the nominal rate of interest j ...

(a) Find the nominal rate of interest j compounded quarterly which is equivalent to a 5% e ective rate of interest. (b) Which one will deliver a higher future value on a deposit

Relationship between spot rates and short-term forward rates, Assume ...

Assume that an investor invests $X in a 3-year zero coupon Treasury security. Three years from now, the total return received would be:

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd