Business, Management and Accounting
5 years ago

New method slashes cash flow needs for enterprises, changing financial landscape.

South African Journal of Business Management
Replacement cost depreciation and cash flow requirements
R. Conrad Doenges, W. D. Hamman, I. J. Lambrechts

Paper Summary

The article explores if using replacement cost for depreciation meets cash flow needs. It shows that no backlog depreciation is needed, extra depreciation is only needed with equity financing, and the ratio of replacement cost depreciation to historical cost depends on inflation, asset lives, and gearing ratios.

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