Question:
1-Why do we focus on cash flows rather than accounting profits in making our capital-budgeting decisions?
See Also
Cash Flow vs Net Income: What’s the Difference? - Finmark7 Reasons Why Cash Flow is More Important Than Profit - ShineWingCauses of cash flow problemsHow a Company Can Succeed Without Making a Profit - SmartAsset Blog2-Why are we only interested in incremental cash flows rather than total cash flows?
Incremental Cash Flow:
This is a term used in corporate and project finance and refers to the net cash flows created by one project. The calculation includes the initial outlay of cash, the cash inflows from beginning the project, terminal costs, and the scale of the project.
Answer and Explanation:1
Become a Study.com member to unlock this answer!Createyouraccount
1-We focus on cash flows rather than accounting profits in making our capital budgeting decisions because earnings include non-cash transactions like...
See full answer below.
