Incremental Cash Flow

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Definition: Incremental Cash Flow

Incremental cash flow is the excess cash flow that a firm gains by undertaking a new project or activity. It is the difference between the firm’s current cash flows estimates and the estimates if the project is undertaken.

It helps in evaluate the project on monetary terms.

If the incremental cash flows are project, it indicates that the project may be beneficial to the company if all other parameters remain constant.

If the incremental cash flows are negative, then the project will not be beneficial to the company.



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