Why the timing and quantity of cash flows are important in capital investment decisions?

Cash Flow generated by Capital Investment:
It gets down to return on your investment. For example, if a company could add capacity by purchasing more equipment for $1M, but it would only generate an additional $100K/year in cashflow on avg over 10yrs, that's a 10yr break even, not a good return on investment. That $1M could be better spent by repurchasing shares, put toward acquiring another company, etc... it comes down to return on investment.

Cash flow/purchasing Capital Investment:
You will need to have enough cash flow to sustain operations and therefore may need to purchase capital with debt/depreciate it over time, to allow your cash flow to remain net positive after all expenses.

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　　Earn Money 　　Direct Investment 　　Debt Financing 　　Capital Investment 　　Business Investment 　　Business financing 　　Business Invest 　　Business Debt

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