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Benefits of depreciation, cash budgeting, and cash flow

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What is the benefit of depreciation?
What are some of the issues for a financial manager in reviewing pro forma financial statements?
Is cash budgeting necessary? Why or why not?
Simplify the differences between cash flow, operating cash flow and free cash flow.

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Solution Summary

This solution answers the following series of questions:

1. What is the benefit of depreciation?
2. What are some of the issues for a financial manager in reviewing pro forma financial statements?
3. Is cash budgeting necessary? Why or why not?
4. Simplify the differences between cash flow, operating cash flow and free cash flow.

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Benefits of depreciation:

1. Depreciation can help the company reduce taxes in higher income years
2. Depreciation is a non-cash charge which implies that the firm can make a depreciation deduction in the current year even if they did not spend money to buy the item in that year
3. Depreciation impacts companies' financial statements such as balance sheet, profit and loss ...

Solution provided by:
Edwin Sinclar, MBA
Education
  • MBA, Aspen University
  • Bachelor of Science , Berea College
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