To critically think about: The type of cash flow that includes interest expense.
Introduction:
Cash flow refers to the difference between the cash that comes into the business and the cash that goes out of the business. The following are the different types of cash flows in a corporation:
- Cash flow from assets:
It refers to difference between the revenues from the sale of assets and the money invested in purchasing the assets.
- Cash flow to creditors:
It refers to the interest paid to the creditors minus the net fresh debt borrowed by the company.
- Cash flow to stockholders:
It refers to the dividend paid to the shareholders of the company minus the fresh equity raised by the company.
- Operating cash flow:
It refers to the cash flow from operating activities of the firm.
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Fundamentals of Corporate Finance (Special Edition for Rutgers Business School)
- Explain the purpose of the statement of cash flows and why this statement is needed.arrow_forwardIn computing the periods net operating cash flows, why are noncash expenses added back to net income?arrow_forwardIs there any significance that can be attributed to whether net cash flows are generated from operating activities, versus investing and/or financing activities? Explain.arrow_forward
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