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

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why do we focus on cash flows instead of profits

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.

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Financial Management: why do we focus on cash flows instead of profits

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Financial Management: why do we focus on cash flows instead of profits

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