Revenue earned does not equate with cash coming into the business, nor does payments made match up with expenses incurred. The expenses of a business affect the profit margin.

Should a company focus on cash flows or accounting profits when making a capital expenditure decision?

Should a company focus on cash flows or accounting profits when making a capital expenditure decision?

A company can have a profit but do not have cash because profit is computed using revenues and expenses,which are the different from the company's cash receipts and cash disbursements. In other words, there is a dfference between revenues and receipts .

How can a company have a profit but not have cash ?

Do cash and profit battle ?

Cash and profits need to be watch carefully.

Este tema ya fue tocado en un modulo anterior donde podemos apreciar que no necesariamente el dinero en efectivo que se encuentra en una cuenta de la empresa es pues la utilidad de la misma ya que los ingresos están afectos a los descuentos por inversión impuestos gastos directos indirectos sueltos etc la diferencia entre los ingresos y los egresos menos el capital inicial invertido os dará el valor de la utilidad real

Payments made, is it in terms of over head costs?

Using the incremental cash flows and discounting them to reflect the time value of money is the preferred method. The two most common techniques involved in discounting cash flows are net present value and internal rate of return. While the discounted cash flow models are the ideal, I would also want to forecast or project the impact on the company's future financial statements. Therefore, I would also calculate and understand the effect on the accounting profits resulting from the capital expenditure