Chapter 7: Cash Flows in Practice

Chapter 2 (What Is It About Cash Flows?) introduced relevant cash flows, which are cash flows that result from a company doing something new (drilling an exploratory well, for example) and also cross its border with the outside world (meaning that cash transfers from a bank account it owns to someone else’s, or the other way around).

Relevant cash flows may be brand new; that is, they don’t already exist, such as the cost of drilling the exploratory well, for example, or they may be changes to already existing cash flows, such as a change in how much tax the company pays. However, as is often the case, the devil is in the detail. So this chapter is going to talk about the devil in the detail of relevant cash flows.