Cash Flow Statement: Analyzing Cash Flow From Financing Activities
Its a process. The regions political leaders cant simply decide that they want eight-car trains in 2021, so theyll buy enough rail cars in 2020 to make just this one domain that happen. They also have to start investing in the maintenance and storage facilities and in the power system to support such a fleet, a program that will take years. Thats why Sarles wants Year One to be 2014.
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The same can be said for long-term debt, which gives a company flexibility to pay debt down (or off) over a longer time period. Short-term debt can be more of a burden as it must be paid back sooner. Returning again to Covanta, the firm must have access to stable, long-term capital because the waste-to-energy facilities it builds cost millions of dollars and are under contracts with local governments and municipalities that can last for a decade or more. The energy that is provided (in most cases, steam is generated from the burning of trash and related waste) is also sold under long-term energy contracts.
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