Which of These Is the Process of Estimating Expected Future

question 52

Multiple Choice

Which of these is the process of estimating expected future cash flows of a project using only the relevant parts of the balance sheet and income statements?

• A) Incremental cash flows
• B) Cash flow analysis
• C) Pro forma analysis
• D) Substitutionary analysis

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Definitions:

Cash Balance

The amount of cash or cash equivalents that a company or individual has available at any given time.

Common-Size Statement

A common-size statement is a financial statement in which each line item is expressed as a percentage of a certain figure for the purpose of comparison and analysis, such as revenues in an income statement.

Financial Positions

The status of an individual's or organization's assets, liabilities, and net worth at a specific point in time.

Liquidity

The ease with which an asset, or security, can be converted into ready cash without affecting its market price.