Does the Net Present Value (NPV) calculation uses cash inflows or profits?

Net Present Value (NPV)
Knowledge Center

 

Next Topic

Net Present Value (NPV) > Forum > Does the Net Present Value (NPV) calculation uses cash inflows or profits?

Does the Net Present Value (NPV) calculation uses cash inflows or profits?
Tafadzwa
Does the NPV calculation uses cash inflows or profits? Should I use the revenue generated by the project or the profit?
 

 
NPV and Cashflows
Alpin McGregor, freeelance, United Kingdom, Member
NPV and IRR both use cashflows. Profit is not a cashflow. An approximation for cashflow would be profit plus depreciation. Remember this is only an approximation. For capital investment decisions by a firm, the firm will need to prepare cash forecasts anyway (or at least it should do) so the question of using profit or even having to adjust profit for non cash items such as depreciation should not arise.
 

     
Special Interest Group Leader

Interested? Sign up for free.


Net Present Value (NPV)
Summary
Forum
Best Practices


    Net Present Value (NPV)
    Knowledge Center

     

    Next Topic



    About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
    2019 12manage - The Executive Fast Track. V15.1 - Last updated: 23-8-2019. All names of their owners.