The amount of cash flowing into the firm can be higher or lower than the net income figure.

Question

Quizplus · Accepted Answer

Net income is the profit earned by the company after deducting all the expenses from the revenue generated. However, the amount of cash flowing into the firm depends on various factors like accounts receivables, accounts payable, inventory changes, depreciation, and amortization. Hence, it is possible for the cash flow to be higher or lower than the net income figure.

The Amount of Cash Flowing into the Firm Can Be