IMPACT OF THE PRODUCT LIFE CYCLE ON A COMPANY'S CASH FLOWS
Impact of the corporate life cycle on a company’s cash flows All the product go through a series of phases called the product life cycle .The phases are :introductory phase , growth phase , maturity phase and decline phase .The introductory phase occurs at the beginning of a company’s life, when it is purchasing fixed assets and beginning to produce and sell products. During the growth phase, the company is striving to expand its production and sales. In the maturity phase, sales and production level off. During the decline phase, sales of the product fall due to weakening in consumer demand. As in the following diagram, the phase a company is in effects its cash flows. In the first phase, we expect that the company will not be generating positive cash from operations. That is, cash used in operations will exceed cash generated by operations in the introductory phase .Also; the company will be spending considerable amounts to purchase productive assets such as buildings