Question

What should projected cash flows be enough to pay for when assessing the cash flow position?

Options

• Operations, fixed assets, interest and repayment of principal, with some buffer

• Fixed assets alone, without repayment of principal

• Interest alone, without any buffer

• Operations alone, without interest

Answer 1

Projected cash flows should cover operations and fixed assets as well as interest and repayment of principal. Some buffer provides room to meet these payments.