Introduction

Financial analysts are devoting attention to a figure they call 'cashflow'. The Accounting Principles Board has expressed concern with the increasing usage of this calculation, particularly to the extent that it replaces income as a means of measuring corporate performance. Cashflow is indeed apparent that the financial analysts are infected with some sort of malady. That malady might be called 'information anemia'. Cost allocation under present depreciation procedures may be considered 'systematic', but it is by no means uniform. A major obstacle to progress in depreciation accounting has been the Federal income tax regulations. The real reason for the increased depreciation charge in 1962 was the easing of Federal income tax requirements. The primary reason for calculating the sum of depreciation charges and income, the figure inappropriately dubbed 'cash-flow', is to counteract the effects of discretionary depreciation practices used in determining income.