Which term defines the net flow of dollars into or out of a proposed project as the algebraic sum of all cash receipts, expenses, and investments in a given period?

• A. Carrying cost
• B. Cash flow
• C. Capable-2-promise
• D. Cause-and-effect diagram

Answer: (B)

The main idea here is how to quantify the money moving in and out of a proposed project over a period. Cash flow is the net amount that results when you algebraically sum all cash receipts, expenses, and investments within that period. In practice, you forecast inflows such as sales or cost savings and outflows like operating costs, taxes, and required capital investments, then combine them to get the net cash flow for the period. A positive net cash flow means the project adds cash, while a negative one means it uses cash. This concept is essential for evaluating profitability and liquidity in capital budgeting. Carrying cost pertains to the expense of holding inventory, not the overall project cash movement. Capable-to-promise relates to order promising and capacity planning, not cash flow. A cause-and-effect diagram is a quality-analysis tool, not a financial measure of cash movement.