Question

Answer urgently

Describe the following cash flows

Initial cash flow:

Annual cash flow

And Terminal cash flow

Research and development

Working capital

Sale proceeds

Answer 1

01. Initial Cash Flow: Initial cash flow can be defines as the amount of money received (or paid out) by the organisation at the beginning or an investment or a project. Because of the presence of the initial investment the initial investment is usually negative.

02. Annual Cash Flow: Annual cash flow can be defined as the difference between the inflows and outflows of cash during a year. i.e. it is the net of cash transferred in and out of an entity during a year.

03. Terminal Cash Flow: Terminal cash flow can be defined as the cash flow that occur at the end of the project or investment. It includes the proceeds from the disposal of assets used in the project.

04. Research and Development: It can be defined as the activities undertaken by an entity to innovate existing products or to introduce a new product in the product line. This is done to increase the effectiveness and efficiency of existing products and to discover new product ideas.

05. Working Capital: Working capital can be defined as the amount of capital or fund required by the entity to perform its day to day operations. This is an indicator of short term financial position of the entity and is calculated by subtracting current liabilities from current assets.

06. Sale Proceeds: Sale proceeds can be defined as the amount of money received from the sale of goods or services. It can be calculated by multiplying the sale price of goods by the quantity sold.

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