Chapter 10 Cash Flow Estimation

A photo of a gear, wrench, and nut and bolt set.

Learning Objectives

  1. LO1 Understand the importance of cash flow and the distinction between cash flow and profits.

  2. LO2 Identify incremental cash flow.

  3. LO3 Calculate depreciation and cost recovery.

  4. LO4 Understand the cash flow associated with the disposal of depreciable assets.

  5. LO5 Estimate incremental cash flow for capital budgeting decisions.

A major metric of a company’s health and its prospects for a long life is how much cash flow it can generate. Most businesses fail because their cash flow dries up. Managing the streams of money in and out of a business enterprise is critical to its success. ...

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