current management accounting literature
The current management accounting literature uses the term `cash-flow' in two different ways. Some use 'it to refer to the movement of cash in and out of the business.
They are interested in accounting for the change in the cash account by subtracting the cash disbursements of the period from the cash receipts..Other use this term t represent funds provided from operations.
It is a concept of cash flow ;:prevalent in financial analysis that is net income plus non-fund charges such as depreciafica, amortization and depletion.
Adding back such items as depreciation does not convert the net income to something which can properly be called cash-flow or cash income.
The later concept of cash- flow does not represent the net change in the cash account during the period under study, but rather the change in net working capital due to operations.
Hence the first concept of cash-flow is more useful for financial analysis. We shall also use this term in our analysis in the first sense of the term.