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21 January, 07:48

A firm has 100 million in revenue. does that mean that it has generated a cash flow of 100 million

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  1. 21 January, 08:05
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    According to the Revenue recognition principle, a revenue can be recognized even if the actual amount is not collected. In other words, revenue may or may not be collected in cash. The Sales may be a cash sales or credit sales and both may be recognized as Revenue for a particular accounting period.

    Hence if a firm has 100 million in revenue that does not necessarily mean that it has generated a cash flow of 100 million. Because some part of the revenue may be on credit.

    Hence the answer is NO.
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