Evaluation of Capital Budgeting Proposals is based on Cash Flows because:

The correct answer is C. Cash is more important than profit.

Cash flow is the movement of money into and out of a business. It is a more accurate measure of a company’s financial health than profit, because it takes into account all of the cash that is coming in and going out, including expenses such as taxes and interest payments.

When evaluating

capital budgeting proposals, it is important to consider the cash flows that the project will generate, because these are the funds that will be available to repay the project’s costs and provide a return on investment.

Option A is incorrect because cash flows can be difficult to calculate, especially for complex projects. Option B is incorrect because SEBI

does not require companies to use cash flow analysis for capital budgeting decisions. Option D is incorrect because cash flow is a more important measure of a company’s financial health than profit.