--%>

Why do focusing on cash flows rather than profits

Why do we focus on cash flows rather than profits while evaluating proposed capital budgeting projects?
We targeted on cash flows instead of profits while evaluating proposed capital budgeting projects since it is cash flow that changes the value of a firm. You can spend cash however you cannot spend profit.

   Related Questions in Finance Basics

  • Q : What is Abolishment of Fund Abolishment

    Abolishment of Fund: It is a closure of fund pursuant to the operation of law. The funds might also be administratively eliminated by the Department of Finance with the concurrence of the State Controller’s Office. Whenever a sp

  • Q : Explain Year of Budget Year of Budget

    Year of Budget (YOB): In this the fiscal year revenues and expenses are recognized. For revenues, this is usually the fiscal year whenever revenues are earned. For expenses, this is usually the fiscal year whenever obligations, compri

  • Q : Explain Language Sheets Language Sheets

    Language Sheets: The copies of the current Budget Act appropriation items offered to Finance and departmental staff each fall to update for the proposed Governor’s Budget. Such updated language sheets become the proposed Budget Bill. In spring,

  • Q : Retiring an internally held debt and

    Normal 0 false false

  • Q : Describe formula to figure out

    Normal 0 false false

  • Q : Fin 235 Personal Finance Homework Fin

    Fin 235 Personal Finance Homework Chapter 8: Problems: 1, 3, 5, 7 1.   Most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless items are covered with additional insurance. If a family

  • Q : Lower for a specified company-the cost

    Normal 0 false false

  • Q : Negative consequences of company

    Explain negative consequences of a company holding too much cash? A company holding too much cash would be giving up the chance to invest more in income generating assets

  • Q : Decision rule using net present value

    Describe the decision rule for accepting or rejecting proposed projects while using net present value? While using the net present value decision rule any project along with a net present value greater than or equal to zero would be acceptable.

  • Q : Computing the amount of excess reserves

    Normal 0 false false