Describe the Three Commonly Used Capital Budgeting Techniques

question 111

Essay

Describe the three commonly used capital budgeting techniques.

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Definitions:

Operating Activities

Transactions and events that enter into the determination of net income, including the production, sale, and delivery of a company's products and services.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives.

Operating Activities

Operating activities are the day-to-day actions that involve the production, sales, and delivery of a company's products and services, reflected in its cash flow.

Indirect Method

A financial reporting technique used in cash flow statements to adjust net income for changes in non-cash accounts to identify the actual cash inflow or outflow from operating activities.