How can the cash flows of a project be computed from standard financial statements?

-

How can the cash flows of a project be computed from standard financial statements?



Answer: Project cash flow does not equal profit. You must allow for changes in working capital as well as non-cash expenses such as depreciation. Also, if you use a nominal cost of capital, consistency requires that you forecast nominal cash flows - that is, cash flows that recognize the effect of inflation.

Comments

Post a Comment

Popular posts from this blog

Agile Method Advantages and Disadvantages

-
Agile Method Advantages and Disadvantages Agile, or adaptive, methods are very flexible and efficient in dealing with change. They are popular because they stress team interaction and reflect a set of community-based values. Also, frequent deliverables constantly validate the project and reduce risk. However, some potential problems exist. For example, team members need a high level of technical and interpersonal skills. Also, a lack of structure and documentation can introduce risk factors. Finally, the overall project may be subject to significant change in scope as user requirements continue to evolve during the project.
Read more