Cashflow and Material adverse effect: Difference between pages

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(CF).
(MAE).  
The movement of cash in or out of a business, a project or a financial instrument in a particular period under review.


The cashflow for a given period may differ from the profit or loss for the same period because of:
A clause in a loan agreement. 


(1) Items in cashflow which are not part of profit or loss.  For example capital expenditure or the collection of trade debtors arising and recognised in prior periods; and
It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.   


(2) Items in profit or loss which are not cashflows, such as depreciation, amortisation, or making accruals.


== See also ==
== See also ==
* [[Accrual]]
* [[Event of default]]
* [[Amortisation]]
* [[Loan agreement]]
* [[Cash]]
* [[Material adverse change]]
* [[Cash conversion cycle]]
* [[Adverse event]]
* [[Depreciation]]
* [[Free cash flow]]
* [[Incremental cash flows]]


[[Category:Bank_Lending]]
[[Category:Debt_Capital_Markets]]
[[Category:Legal_Documentation]]

Revision as of 07:35, 5 July 2014

(MAE).

A clause in a loan agreement.

It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


See also

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