Cash Flow Analysis Statistics & Risk Management

Cash Flow Analysis

Statistics & Risk

Management

Copyright © Texas Education Agency, 2012. All rights reserved.

1

Cash Flow

 Cash Flow is different from Profit.

 You can be Rich but Cash Starved.


3

Example

 You firm sells a million dollars in sales ON

CREDIT!!!!!

 You think you might get paid in 90 days?????


4

Example

 You buy a prime location to build a plant for

$1,000,000.00 and have a $100,000.00 payment due now.

Won’t that reduce your profit?


5

Cash Flow Analysis

$53,610= Cash Flow =

+$69,000 + Net Profit

+$22,500 + Payments on Accounts Receivable

-$37,890 - Sales on Accounts Receivable

What could be the consequences of income taxes on the profit and cash flow?


6

Cash Flow Analysis

$70,822= Cash Flow =

+$69,000 + Net Profit

+$5,500 + Depreciation Expense (No land allowed)

-$3,678 - Service Debt on Principle


7

Another Way to Look at the Same Thing.

Note: This might be totally different from your

Profit and

Loss

Statement.

Notice the

Dividend line. Why is this not on the

Profit and

Loss?


8

Internal Rate of Return

 Used to Identify the rate (percentage) of a return on something you spend money on.

You can use actual figures or projections.

 Great for proposals pitching new projects or equipment.


9

Net Present Value

 Used to put a real current value on revenue received over time.

 Could you sell your pension or annuity?


10

Cash Flow Analysis Statistics & Risk Management

Cash Flow Analysis

Statistics & Risk

Management

Cash Flow

Example

Example