Analyze some examples of relevant and irrelevant Cash Flows for one Saudi Company?

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Analyze some examples of relevant and irrelevant Cash Flows for one Saudi Company?

business accounting

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Answer 1

Answer #1

There are relavant and irrelevant items in Cash Outflow of a Company.

Examples of Relavant Cash Out flow is as follows

Variable Labour Expenses
Variable Material Expenses
Additional Fixed Overhead Expenses
Cost of the Investments
Marginal Taxes

Examples of Irrelevant Cash Out flow

Fixed Overheads Expenses (Existing)
Sunc Costs

The relavent cash in flow and outflow is directly related with the investment and cost of investment. Irrevant items like fixed overheads is not relavent because it will remain fixed whether proposal will be accepted or not accepted.

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Answer 2

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