incremental cash flows

Incremental cash flows

Difference between the firm's cash flows with and without a project.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Incremental Cash Flows

The difference between a company's cash flow and its potential cash flow, should it undertake a certain project. That is, a company nets the potential cash flow from a project it is considering and subtracts its current cash flow in order to calculate the incremental cash flow. This is important in the risk analysis of a potential project; a negative incremental cash flow indicates that the project is likely not worth the risk. A positive incremental cash flow shows that, all other things being equal, the project may be beneficial for the company.
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incremental cash flows

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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Positive same-store net operating income (SSNOI) growth and incremental cash flows from development deliveries are factors supporting Fitch's projections.
It is considered the most reliable method for capital budgeting decision-making as it takes into account a given investment's incremental cash flows discounted considering their magnitude, timing, and risk.
The stock has potential to quadruple based on an assessment of incremental cash flows and management's capital allocation priorities, Mehrotra told investors earlier in a research note.
We model and discuss a concept that we dub "the cash flow sensitivity of cash." In essence, we isolate the fraction of incremental cash flows that firms retain as additional cash in each period.
In this investigation, the focus was on three such issues: (1) finite horizons, (2) incidental cash flows, and (3) incremental cash flows. Failure to correctly understand and handle them would potentially lead to completely incorrect corporate investment decisions.
He added that, for CVS itself, the joint venture brings quantifiable incremental cash flows to the company over the next 10 years "and also the potential for savings down the road."
In that respect, premised on the second feasibility report submitted by MESB to the Government in January 2013 and latest available information, RAM has been made to understand that the Spur Link is to be viewed as a separate project to be funded via additional debt as well as incremental cash flows from the introduction of potentially 2 new toll-plazas.
Moreover, the data show that after acquisition, target firms save less cash out of incremental cash flows, and that the target firm's investments tend to be less correlated with cash flows.
However, it is well accepted that creating value gains (synergy) or incremental cash flows from mergers has been the dominating explanation provided to the shareholders of the merging parties.
The incremental cash flows expected from the real estate foray also add comfort to the rating.

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