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Profit is not cash flow:
Adequate cash is essential to keep business running. Inadequate cash increases the risk of not being able to meet current obligations as and when they arise which is dangerous to the company. There are many instances when businesses failed because of lack of cash flows even if they were profitable. Vice versa also hold good. Under accrual system of accounting net income (revenue less expenses) does not equate net positive cash flows. The difference is the timing of sale; expenses and profit do not coincide with their associated cash flows. Hence there is always a discrepancy between profit and net cash flow.A statement of Cash Flows is an essential component of Financial Statements. As the profit and loss account and the balance sheet are prepared on accrual basis, the profits disclosed by the profit and loss account do not indicate the liquidity of the firm. A firm may be highly profitable but may find itself with hardly any cash or working capital to continue the operating cycle. On the contrary, a loss making firm may have sufficient cash flows.
the salaries paid in 2004 is rs. 500000 salaries outstanding is rs.20000 salaries paid in advance for 2004 is rs 30000 what is the actual salary expenditure for 2004?
You are evaluating a project which costs $720,000, has a four-year life, and no salvage value. Depreciation is straight-line and the half year rule does not apply. Sales are projec
Lenders' evaluation: Current Assets to Current Liabilities, Quick Assets that is current assets minus inventories to Current Liabilities, Long term Debt to Net Assets, to
what managers should know about internal rate of return (IRR) and why?
Q. What is Contractor Ledger? Accounts relating to contractors should be kept as personal accounts in contractor's ledger and a separate folio should be opened in the Contracto
Minority interest (MI) When the holding company owns less than 100% of the ordinary share capital of the subsidiary company then the other balance is held by minority interest. T
Absorption costing is a cost accounting method that tries to charge all direct costs and all production costs of an organization to specific units of pr
The following information is for the third quarter of this year: Planned Actual Production 92,000 units
Assume that you are interested in understanding how much must be saved regularly over a period of time in order that at the ending of the period you have a particular amount. To an
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