--%>
Assignment Help - homework help

Depreciation affect the flow of cash

Explain in brief the depreciation expense as it comes on the income statement.  How can depreciation affect the flow of cash?

E

Expert

Verified

Accounting depreciation is the allotment of the asset's initial cost over time. Depreciation expense present on an income statement is the amount of the assets initial cost allotted to the period covered under the income statement.

Depreciation expense is not like a cash flow. It is an expense category which affects cash flow because it is tax-deductible.  Depreciation expense decreases taxable income of a company and thus its income tax liability. Thus it can be said that depreciation in a way reduces cash outflows.

   Related Questions in Financial Management

  • Q : Straight Supply Can I get the answers

    Can I get the answers for straight supply?

    		•
  • Q : Raising funds from outside the

    Elucidate: Companies with rapidly growing levels of sales do not need to worry about raising funds from outside the organisation.

    		•
  • Q : Explain Letters of Credit Letters of

    Letters of Credit: It is a binding document which a buyer can request from his bank in order to pledge that the payment for goods will be moved to the seller. Principally, a letter of credit provides the seller reassurance that he will obtain the paym

    		•
  • Q : Probabilities and statistics for

    Explain probabilities and statistics for quantifying risk in finance.

    		•
  • Q : How can financial managers estimate the

    How can financial managers estimate the average tax rate?

    		•
  • Q : Eurodollar futures contracts based

    Illustrate how the bank can employ a position alternatively in Eurodollar futures contracts to hedge the interest rate risk formed by the maturity mismatch it has with the $3,000,000 six-month Eurodollar deposit & rollover Eurocredit position indexed to th

    		•
  • Q : Explain Weak-form deficiency in

    Explain Weak-form deficiency in Efficient Markets Hypothesis.

    		•
  • Q : Income statement 1)What 3 items of

    1)What 3 items of important information does the income statement reveal about the financial performance of the company over the last three years?

    		•
  • Q : Explain linear or non-linear in Monte

    Explain linear or non-linear in Monte Carlo method.

    		•
  • Q : Compute minimum price with striking

    Suppose spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950. Estimate the minimum price which a six-month American call option along with a striking price of $0.6800 must sell for in a rational market? Suppose the annualized six-month Eurod

    		•