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Investment decisions

Sir, in Investment Decisions, we add back depreciation to get CFAT as depreciation is an expense which does not involve cash outflow. But while calculating Net sale proceeds, they're including the Tax shield as a cash inflow eventhough there is no inflow of cash


Enuguru Sai Nithin

Enuguru Sai Nithin

CA Inter

76K+

09-Oct-20 23:46

11

Answers (3)

When you sell, you get cash.


Suraj Lakhotia

Suraj Lakhotia

Admin

10-Oct-20 12:35

When you sell, you get cash.

Sir I am asking we add depreciation because it is not an actual cash flow. So as tax sheild is also not a cash inflow know then why do we add it ??


Enuguru Sai Nithin

Enuguru Sai Nithin

CA Inter

76K+

10-Oct-20 12:37

It is adjustd as there will be a tax benefit or outflow.


Suraj Lakhotia

Suraj Lakhotia

Admin

10-Oct-20 13:09