1 / 15

Cash Flow and Financial Planning

Cash Flow and Financial Planning. Outline. Introduction Analysing Cash Flows The Financial Planning Process Cash Budgets Pro forma statements. Introduction. Depreciation Accounting vs Tax

vanessar
Télécharger la présentation

Cash Flow and Financial Planning

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Cash Flow and Financial Planning

  2. Outline • Introduction • Analysing Cash Flows • The Financial Planning Process • Cash Budgets • Pro forma statements

  3. Introduction • Depreciation • Accounting vs Tax • Depreciable value = all cost necessary to get asset into condition needed to use the asset less salvage/residual value • Depreciable life • Depreciation methods • Straight line • Reducing balance • Sum of years

  4. Statement of Cash Flows • Purpose: • analyse cash flows • Analyse strength of business • Analyse funding decisions • Analyse investing decisions

  5. Operations Investing Financing

  6. Cash Flows in pictures

  7. Cash from Operations • Net profit • Adjusted for non-cash movements: • Depreciation • Bad Debts • Impairment • Working capital movements • Changes in accounts receivable • Changes in Inventory • Changes in accounts payable • Changes in accrued expenses • Changes in other current assets and liabilities Use T-Accounts when not sure

  8. Operating Cash Flows (OCF) • OCF = NOPAT + Depreciation • Nopat = EBIT x (1-T) • Therefore OCF = EBIT x (1-T) + Depreciation • EBIT = Operating Profit (Earnings before Interest and Tax)

  9. Free Cash Flow (FCF) • FCF = OCF – CAPEX – Changes in Working Capital • FCF = OCF – Net non-current investment – Net current asset investment • NNCI = Change in net non-current + depreciation X

  10. Financial Planning Process Guide Strategic Cash Planning Operational Profit Planning Long Term Short Term Co-ordinate Control

  11. Long-Term Financial Plans • Bigger picture • 2 – 10 years

  12. Short Term (operating) Long-term Financing plan Non-Current Asset layout plan Cash Budget Current Balance Sheet

  13. Sales Forecast • External • Internal • Cash Receipts (Lagged) • Sales receipts • Other receipts • Cash Disbursements (Lagged) • rent • Wages and salaries • Tax • Interest • Dividends • Principal loan repayments

  14. Cash Receipts - Cash Disbursements = Net Cash Flow + Beginning Cash - Desired Minimum cash balance = Required Total financing / Excess cash balance

More Related