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Why is Operating Cash Flows, rather than accounting profits (Net Income), the better basis for emphasis...

Why is Operating Cash Flows, rather than accounting profits (Net Income), the better basis for emphasis on cash flows?

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Accounting profits comprise of various non cash expenses such as depreciation. Operating cash flow takes into account only cash flows and ignores depreciation as well as cost of Financing. It considered only the cash flows and not accounting income and hence is more useful in understanding the cash flow position of the business or assessment of a project. Also operating cash flows are harder to manipulate than net income and hence they give a better picture of the performance of the business or project.

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