Understanding Projected Cash Flows

Cash flow within a business is the difference between the number of dollars that came in and the number of dollars that went out. While there is a standard financial statement for this information, it is not presented in a clear way. In order to have a comprehensive understanding of cash flow, we look at the following criteria:

Cash From Operating Activities

Operating Cash Flow: include the revenues minus the costs. These numbers include taxes but exclude depreciation and interest. This is an important number because we can see how successfully a firm’s cash inflows cover everyday cash outflows.
Change In Net Working Capital: As you make changes in your investments towards current assets, your current liabilities will usually change as well. This is calculated by taking the difference between the beginning and ending net working capital figures.

Cash From Investing Activities

Capital Spending: Net capital spending is the money spent on fixed assets net of any sales of those fixed assets.

Cash From Finance Activities

Creditors: Your interest payments to creditors with a reduction of net new borrowings
Stockholders: Your dividends paid out by a firm minus new equity raised.

The Full Cycle CFO Difference

Why Choose Our Team?

Looking at just your bank account will not give you an accurate assessment of your available cash. Looking at just your financial statements, will also not give you any information about how “cash healthy” your business is. You need an in-depth look at all business activity and consider what is on the horizon to make decisions on spending now. Most accountants may have a base understanding about projected cash flows but may not give the best in-depth analysis you need. Full Cycle CFO offers projected cash flow analysis so you can make better moves and start projects without the risk of running out of cash. We can add the value of a comprehensive projected cash flow analysis that can be constantly updated. Cash flows fluctuate with every new day and your business needs a continuously revised cash flow projection so you can make the best decisions for your company.