And if it does this exercise in detail, it has a much better chance of borrowing, as the cash flow forecasting gives confidence to the lender. It still does, but the Statement of Cash Flows in a financial statement was expended several years ago to include the other components of the sources and use of cash. These are the sale or purchase of assets, borrowing or repayment of debt, and any net equity transactions such as sale of new stock or redemption of stock. Otherwise, the business will have to convert assets into cash to fund a shortfall and, if these assets are current assets, this will rob working capital. But this is robbing Peter to pay Paul, not a long term solution.
Depreciation is also a hard term for some people to grasp.
The taxi is expected to produce cash revenue for five years. You can see that the depreciation was expensed , but the outflow of cash was not.