1. which of the following mechanisms helps to align management
Net Cash Flow = EAT + Depreciation – Interest – Capital Expenditures + Stock Sales
Therefore, Ship-to-Shore’s net cash flow for last year was $300,000 ($320,000 + $52,000 – $40,000 – $28,000 + $36,000). This figure provides an indication of how much liquidity a company has at any given time and is an important metric in ascertaining its overall financial health. It can help identify whether or not the company has enough funds available to cover short term debts or other obligations such as salaries or operational costs.
Cash flows also play an essential role when it comes to making investment decisions. Companies must ensure that they have sufficient capital on hand in order to fund growth initiatives and provide returns to current shareholders. As such by calculating their net cashflows owners are able to gain better insight into their current situation enabling them to make more informed decisions with regards to potential investments or expansions plans.
Finally, monitoring changes over time can also be beneficial as it allows management teams and investors alike to spot deviations from expected trends which could signal issues that require further investigation. This information can then be used proactively in order to address problem areas before they become major headaches down the road thus allowing companies stay ahead of any potential problems helping ensure long-term success and sustainability.