Explore BrainMass

Cash Flows

A dollar of cash equals a dollar of cash equals a dollar of cash. In other words, most of us would be happy with a $5 dollar bill, five $1 dollar bills or 20 quarters, correct? Does this same theory hold true for the cash flow statement? Would a company rather have a dollar of cash flow from operations or a dollar from investing or a dollar from financing?

Solution Preview

This theory does not hold for a company. This is so becasue each dollar that comes from the different activites has different charcteristics. Some would be more preferable than the others.

Dollar from Financing - This would be borrowing - either debt ...

Solution Summary

The solution explains the difference between the cash flows from operating activities, investing activities and financing activities.