Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.

Question

Quizplus · Accepted Answer

Top management may prioritize earnings over cash flow for various reasons, such as meeting profitability targets, increasing stock prices, or improving financial ratios. Therefore, even if a project generates higher cash flows, it may not be selected if it does not contribute to the company's earnings objectives.

Even Though One Project May Have Superior Cash Flows, Top