Abstract
We use three different definitions of cash flow: equity cash flow (ECF), free cash flow (FCF) and capital cash flow (CCF). We also answer to the question: When net income is equal to the equity cash flow? When making projections, dividends and other payments to shareholders forecasted must be exactly equal to expected equity cash flows. May a company have positive net income and negative cash flows? Of course: one has only to think of the many companies that file for voluntary reorganization after having a positive net income. This is precisely what happens to the company AlphaCommerce that we show as an example. A company’s net income is a quite arbitrary figure obtained after assuming certain accounting hypotheses regarding expenses and revenues (.one of several that can be obtained, depending on the criteria applied). However, the ex-post cash flow is an objective measure, a single figure that is not subject to any personal criterion.
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