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BPP FM Revision Kit Q91

This topic has 3 replies, 3 voices, and was last updated 3 years ago by John Moffat.

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May 19, 2021 at 6:56 am #621002
JanChow
Participant
- Topics: 3
- Replies: 4
For the payback period, why we need to add the depreciation as cash inflow?
Thank you.
May 19, 2021 at 7:20 am #621005
Krishank
Member
- Topics: 4
- Replies: 13
Keep in mind that payback considers cash flows instead of accounting profits
If in question you are provided with EBIT then you are required to calculate the cash flows by adjusting Tax and depreciation.
(EBIT = CFAT+TAX-DEPRECIATION)
CFAT is calculated after tax and before depreciation.
May 19, 2021 at 7:37 am #621007
JanChow
Participant
- Topics: 3
- Replies: 4
Thank you for your reply.
May 19, 2021 at 8:34 am #621033
John Moffat
Keymaster
- Topics: 57
- Replies: 54500
Krishank: Again, please do not answer questions in the Ask the Tutor Forum, because you are not the tutor 🙂
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