ACCT 201 Lecture Notes - Lecture 13: Operating Cash Flow, Tax, Cash Flow
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Dr. ron a. rhoades (cid:494)da bear and a purveyor of great pre-(cid:887)99(cid:886)(cid:495)s music. There are no problems to do in this cpa. Financial managers need to evaluate how cash is going to be used for various investments, or projects. In chapter 10 we reviewed how capital expenditures (capex) projects are evaluated by firms, using the (cid:498)payback period(cid:499) (cid:523)pbp(cid:524) method, the (cid:498)net present value(cid:499) (npv) method, and the internal rate of return (irr). We now turn our attention to some of the intricacies of the capital budging process. We study sections 11. 1, 11. 2 and 11. 3 in this class preparation assignment. Can you now describe them, in your own words? (some additional explanation of terms is provided, as to terms not found in the textbook) Cash flows, generally: cash inflows vs. cash outflows. Components of cash flows: cost of new asset: capital expenditures (cid:523)capex(cid:524) = asset(cid:495)s depreciable value.
