Cash Flow and Financial Planning
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Cash Flow and Financial Planning

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Cash Flow and Financial Planning




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Presentation on theme: "Cash Flow and Financial Planning"— Presentation transcript:

Slide1

Cash Flow and Financial Planning

Slide2

Outline

Introduction

Analysing Cash Flows

The Financial Planning Process

Cash Budgets

Pro forma statements

Slide3

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

Slide4

Statement of Cash Flows

Purpose:

analyse cash flows

Analyse strength of business

Analyse funding decisions

Analyse investing decisions

Slide5

Operations

Investing

Financing

Slide6

Cash Flows in pictures

Slide7

Slide8

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

Slide9

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)

Slide10

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

Slide11

Financial Planning Process

Guide

Co-ordinate

Control

Strategic

Operational

Cash Planning

Profit Planning

Long Term

Short Term

Slide12

Long-Term Financial Plans

Bigger picture

2 – 10 years

Slide13

Short Term (operating)

Current

Balance Sheet

Cash Budget

Non-Current

Asset layout

plan

Long-term

Financing plan

Slide14

Sales Forecast

External

Internal

Cash Receipts (Lagged)

Sales receipts

Other receipts

Cash Disbursements (Lagged)

rent

Wages and salaries

Tax

InterestDividends

Principal loan repayments

Slide15

Cash Receipts

Cash Disbursements

Net Cash Flow

Beginning Cash

Desired Minimum cash balance

Required Total financing / Excess cash balance

-

=

+

-

=