Assignment:
Financial mangers make decisions today that will affect the firm in the future. The dollars used for investment expenditures made today are different from the cash flows to be realized in the future. What are these differences? What are some of the techniques that can be used to adjust for these differences?
Discussion Questions:
Respond to these two classmates 150 word count a piece
Classmate -1:
The dollars used for investment expenditures made today are different from the cash flows to be realized in the future because some assets start to lose their value. Fixed assets, investment instruments (stocks) and lending money all start to lose their value over time. However, the sale of fixed assets, sale of investment instruments and the collection of loans and insurance proceeds change value as time goes on.
Reference
Staff, I. (2018). Cash Flow From Investing Activities.
Classmate - 2:
The managers of a firm use money made on funding operations and capital expenditures to pay investors through dividends and share buybacks. These activities are a product of subtracting any outlays of cash for investment in fixed assets. Cash flow is the net amount of cash and cash equivalents being transferred into and out of a company. Positive cash flow indicates that a company's liquid assets are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders and pay expenses (Murphy, August 18) .
References:
Chris B. Murphy (August 17, 2018), How are cash flow and free cash flow different.