A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $90,000 and will generate $35,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment using a 10% discount rate.

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Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.