Firm's Cash Flows

Factors Affecting a Firm's Cash Flows

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Question

Which of the following does not affect a firm's cash flows:

Answers

Explanations

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A. B. C. D.

Explanation

When the depreciation method is changed, the taxes paid are affected, thus affecting the cash flows indirectly. Sales or purchases of assets and expenses like warranty costs have a direct impact on cash flows. However, when stock is issued to finance an acquisition, there is no net cash involved in the transaction.

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