Purchase Solution

Explain why cash flow is important

Not what you're looking for?

Ask Custom Question

In an organization, such as Wal-Mart, identify at least four significant decisions that must consider cash flow. For each decision, explain why cash flow is important.

My goal is to elaborate on the information that you provide. If you can give me two to three paragraphs on each decision - I should be able to expand that to one page each.

If you use a reference - please provide it for me so that I can continue on the same chain of thought - but references are not required.

Thank you for your assistance!

Purchase this Solution
Solution Summary

This solution explains why cash flow is important.

Solution Preview

Cash flow is extensively used in capital budgeting decisions, ie, whether or not to invest in new plant or machinery or engage in capital projects. Methods such as discounted cash flow analysis use cash flow expected to be generated by the new capital project to arrive at investment decisions.

Cash flows are also important for short term and long term financing decisions. For example, the decision to take a interest ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
Recent Feedback
  • "Thanks"
  • "Thanks"
  • "Very good! "
  • "thanks"
  • "Thank you!"
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • Why statements of cash flow important to decision making

    553892 Why statements of cash flow are important in decision making Explain why cash flow statements are so important to financial decision making and what these statements includes.

  • Accounting: Cash flow.

    Explain why comprehending and managing cash flow is important for financial success. Explain the benefits of cash-flow analysis and any problems that could arise if it is not conducted.

  • Cash Flow and Price Earnings

    An important thing to remember is to view the P/E ratio over time. The solution determines the cash flow and price earnings for the software companies.

  • Organizational form, value, opportunity rate, capital, cash flow

    NOPAT is a better indicator of overall performance since it segregates operations' performance. 6. What is free cash flow? Why is the most important measure of cash flow?

  • Cash Flow Concepts

    Why might an analyst not put much weight on a firm's current free cash flow as an indication of future free cash flow? 4. Explain why very profitable firms sometimes have negative free cash flows.

  • Investment Appraisal Techniques

    (d) Based on the answers in (b) above, which projects would you recommend to the company, explain giving reasons for your answer. (a) Briefly explain why the capital-budgeting process is so important to the company.

  • Business Finance Reasoning: Cash Flows and Capital Structure

    If depreciation is not a cash flow item, why does it affect the level of cash flows from a project in any way? The depreciation is not a cash flow item.

  • Cash Budget

    74095 Cash Budget Are cash budgets implicitly geared towards short-term financial goals? Explain your answer. Is it important to monitor a cash budget only in times of a liquidity crisis? Why or why not?

  • Statement of cash flows,

    Be sure to explain why statements of cash flows are important when assessing the financial strength of an organization.

View More Related Solutions