The Current Cash Flow from Existing Assets Is Highly Relevant

question 53

True/False

The current cash flow from existing assets is highly relevant to the investor.However, since the value of the firm depends primarily upon its growth opportunities, profit projections from those opportunities are the only relevant future flows with which investors are concerned.

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Definitions:

Freight In

Costs associated with getting raw materials, goods, and merchandise transported from suppliers to a company, treated as part of inventory cost.

Multiple-Step Income Statement

A detailed financial statement that separates operating revenues and expenses from non-operating ones, presenting a clear picture of a company's financial performance.

Merchandise Inventory

The goods a company holds in stock with the intent to sell them as part of its business operations.

Administrative Expense

Expenses associated with the general management of a business, such as salaries of executives, office supplies, and utilities.