Determination of Cash Flows

The Present Chapter

It explains how to determine the relevant cash flows for capital investment decisions.


The stake-holders focus on two elements while investing in business: first, what are its investments plans, and second, how does business fund these investments. This involves determination of cash flows. Cash flows are the most important factor in a capital investment decision. Investment decision has to take place today, not in future and therefore capital expenditure is a cash-flow concept; rather than a profit-based concept. Correct computation of cash flow decides the success or failure of any investment decision. Thus, it is imperative to know the process of determination of cash ...

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