relevant cash flows

the cash inflows or outflows which occur as a result of a project will be included as the relevant (also called incremental) cash flows. For example, specific fixed costs for a project are a relevant cost because they only have to be paid if the project goes ahead. Those costs which have to be paid out whether or not the project goes ahead are irrelevant. The relevant cash flows are the cash flows which should be used for capital investment appraisal purposes.

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References in periodicals archive ?

You must take great care in identifying relevant cash flows and you'll also need to consider other factors--for example, tax, inflation, risk and qualitative issue--to assess a proposal.

Performance Operations: Grahame Steven offers his guide to the development of four key investment appraisal methods--and their strengths and weaknesses

After analysing the relevant cash flows carefully and discounting at the appropriate cost of capital, you have produced a summary of these four independent capital projects (see panel 1).

Management accounting--decision management: gain-sharing deals are, on the face of it, a win-win situation for suppliers and their customers. Tim Thompson examines their possibilities and practicalities