Cash Flows at Subsidiary and Parent Level

flows of the project 11 the subsidiary level and the level of the parent Finn. The difference arises  primarily due to tax regulations  affecting repatriation to the parent), exchange controls, inflation  as well as interest rates affecting the exchange rate and so on.

 he difference between the two sets of cash flows also arises on account of (he fad that the parent company usually"charges   management fees, fees for technology transfer and royalties on production sales from its subsidiary units.  As per' the incremental  analysis, these expenses are ignored. However, in estimating the true profitability of the subsidiary unit, these expenses merit  recognition as these are project expenses  at the level of subsidiary, Prostheses expenses- constitute cash inflows incomes at  he  rent'  level and, hence, need to be Counted. In fact,

the principle (as enunciated by Shapiro) can be any cash inflow back to the   investor (parent company in the present context)  should be taken into account in cash Inflows for the purpose of determining NOV   f the project. In respect of other  incomes, the parent :  transfer costs (such as withholding taxes rainier use  as these are the only access the fun D available to it  Assessing true  profitability of an independent subsidiary company in terms of local cu  where it is located, the determination of the CAT L  akin  o a domestic project as show  Format 36.2. Cash inflows to the parent company are depicted in Nonfat 36.3

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