Cash flow refers to the cash revenues less cash expenses. Accounting profit refers to the figure of profit as shown in the profit and loss account. This cash flow is preferable over the accounting profit due to the following reasons: The main objective of a firm is to maximise the wealth of the shareholders which…

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The recognition of the time value of money and risk is extremely vital in financial decision making. If the timing and risk of cash flows are not considered, the firm may make decisions which may allow it to miss its objectives of maximizing the owners welfare. We prefer todays money to that of tomorrow due…

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