BU397 Lecture Notes - Lecture 14: Effective Interest Rate, Equity Method, Accrual
Document Summary
Liquidity and solvency: entity"s ability to generate future cash flows and its needs for cash. The amounts, timing, and uncertainty of future cash flows. Reasons why net income and net cash flow from operating activities differ resources. Investments that are: short term, highly liquid, readily convertible to known amounts of cash, subject to an insignificant risk of change value. Made up of non-equity investments that are acquired with short maturities: less than 3 months. Cash receipts (cash inflows) during the year. Uses of cash (cash outflows) during the year. Fv for the lessor = mlp x pv annuity due factor using the lease term and. Ror as the discount rate + residual value x pv factor (because the residual value is at the end of the useful life) Cash flows resulting from the primary revenue producing activities in the business such as: collections from customers, payments to suppliers, payments to employees, payments to cra for tax.
