John's Comments: Q: How does net cash ow differ from net income and why is that difference relevant to nancial decision making? A: In order understand the difference we must understand what they are at rst. Cash ow, in its simplest of forms, is money into and out of an organization. The ow of money into an organization is inow and the outbound money is outow. Inow can be looked at as prots gained by services rendered or products sold. While outow is money leaving the organization which can in the fonn of payroll, leasing, malntenance or other required payments to keep the organization alive. Net income is the nal number after deduction of expenses. These expenses can vary but likely include payroll, material purchase, facility maintenance, equipment maintenance and other purchases that keep the organization moving forward. Once all of this is calculated an organization can then zero in their net income numbers which could be protable or unprotable. If there is prot, the organization should keep doing what they are doing and improve upon. If it was an unprotable venture then the organization should take a look at a variety of internal processes to see if they can gain a protable venture. The relevancy of these two are incredibly important and should be looked at together. If the cash ow out of an organization is greater than the cash ow into an organization then there is likely trouble on the horizon. A current real world example of this is Netix and their struggle of holding subscribers. They have increased their subscription cost, cut popular shows and attacked password sharing of subscribers. This has caused their inow of cash and new subscribers to slow which should impact their organizational decisions. I am sure their nance team is a bit stressed atthemoment Q: Wlthregardto tax purposes, which type of depreciation methods do organizations prefer and why? A: In the simplest of terms organizations like to use accelerated depreciation due to display of less prot gains in the early years of the assets life span. This can then transfer into writing off used items internal to the organization. When the depreciation reaches a certain point the organization can write it off which signies that the asset no longer holds a value. Question: What is a moderate reasonable reply to J ohn's comments