Financial analysts use the projected cash flow statement to ________.
A) determine the tax effect of cash expenses
B) plan for short-term cash investments
C) analyze the impact of non-cash expense on income statement
D) project depreciation expense

Question

Quizplus · Accepted Answer

Financial analysts use the projected cash flow statement to plan for short-term cash investments, as it gives them an idea of how much cash will be available to invest in the short-term. Option A is not correct, as tax effect of cash expenses is calculated using the income statement. Option C is also not correct, as the impact of non-cash expenses on income statement is analyzed using the income statement, not the cash flow statement. Option D is not correct, as the depreciation expense is already considered while preparing the projected cash flow statement.

Financial Analysts Use the Projected Cash Flow Statement to ________