When net income is composed of large non-cash items it is considered low quality.
In such a case, the company may be deriving additional operating cash by issuing shares or raising additional debt finance. For instance, a company may be notionally profitable but generating little operational cash (as may be the case for a company that barters its products rather than selling for cash). as an alternative measure of a business's profits when it is believed that accrual accounting concepts do not represent economic realities.A company can fail because of a shortage of cash even while profitable. Being profitable does not necessarily mean being liquid. to determine problems with a business's liquidity.The time of cash flows into and out of projects are used as inputs in financial models such as internal rate of return and net present value. to determine a project's rate of return or value.Cash flows are often transformed into measures that give information e.g.
