Cash flow is used for a net present value analysis, while earnings are used for the internal rate of return and payback analysis.
Cash flow is used for all such analyses.

Question

Quizplus · Accepted Answer

While cash flow is certainly an important factor in net present value analysis, earnings (specifically, net income or profit) are used in the internal rate of return calculation and payback analysis. However, cash flow is still an important consideration in all three analyses.

Cash Flow Is Used for a Net Present Value Analysis