All benefits expected from a proposed project must be measured on a cash flow basis which may be found by adding any non-cash charges deducted as an expense on a firm's income statement back to net profits after taxes.

Question

Quizplus · Accepted Answer

Cash flow is a financial measure that accounts for cash generated or used by a business. To determine the benefits of a proposed project, cash flow analysis is necessary. This involves adding back non-cash charges (such as depreciation) to net profits after taxes to determine the cash flow generated by the project.

All Benefits Expected from a Proposed Project Must Be Measured