Question

Differentiate between net cash flow and accounting profit. A firm has net income of $5 million. Assuming that depreciation of $1 million is its only noncash expense, what is the firm’s net cash flow ?

Answer 1

The firm’s net cash flow is $6 million.

Step-by-step explanation:

Net income = $5 million

Depreciation = $1 million

Net cash flow = $5 million + $1 million

= $6 million

Therefore, The firm’s net cash flow is $6 million.