Incremental Cash Flow
Short definition
Incremental cash flow is the firm’s cash with the project minus cash without it. Accrual profit, allocated overhead and sunk cost are not that difference.
Detailed explanation
Write after-tax cash, ΔNWC, capex, salvage and tax effects — not “project profit”. Allocated head-office cost stays out if cash does not change; extra headcount comes in.
Cannibalisation, complementary sales, cash collateral and NWC release are side effects. Inflation and FX must match nominal cash to a consistent discount rate and currency.
Why it matters for the CFO
A wrong incremental definition flips the NPV sign: inflated EBITDA or forgotten inventory lets a reject through.
How it is calculated
CFₜ = Δ(nakit FAVÖK − nakit vergi − ΔNWC − CapEx) + hurda ve yan etkiler
Every line is with-minus-without. Sunk I₀ is in the past; opportunity cost is written in I₀ or CF₀.
Variables in the formula
- Δ: with-project minus without-project
How to read it
Only cash that changes counts. A “fair share” overhead accrual that is not cash punishes the project; a truly scarce resource enters as opportunity cost.
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Definitions are educational. They are not investment, credit or tax advice.