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Sagot :
An increase in depreciation expense will not affect flow cash flows from operations.
Depreciation is an accounting term for the idea that assets depreciate in value over time. An asset loses value after a given period of time because the business can no longer use it.
It’s critical for business owners to understand the depreciation calculation process. It can assist you in figuring out what your actual business expenses are. Your assets could need to be replaced after a given amount of time, and if this isn’t taken into account in your revenue estimates, you can be underestimating the costs your organisation will have to bear.
Cash flow is not directly impacted by depreciation. However, because it alters the company's tax responsibilities and lowers cash outflows from income taxes, it does indirectly affect cash flow. If accelerated depreciation techniques, such as double-declining depreciation, are an option, the impact of depreciation on cash flow may be much greater. This lowers your taxes even more by increasing the amount of depreciation that is tax deductible.
To learn more about cash flow, refer this link
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