Cash Flow Forecasting (eBook)

Andrew Fight (Autor)

eBook Download: PDF

2005 | 1. Auflage
256 Seiten
Elsevier Science (Verlag)
978-0-08-049253-7 (ISBN)

Infos

Budgets are like road maps -- they provide a direction for a corporates financial management. Balance sheets and statements of revenues also provide insights into how well a company is following that direction. But cash flow and cash flow forecasts are what guide the day-to-day itinerary for an organization.

Budgets and cash flow are dynamic -- adjustments and changes can and should occur. If you understand what you are looking at, you can use cash flow to create better budgets and thus more accurate cash flow forecasting.

Cash Flow Forecasting outlines the techniques required to undertake a detailed analysis of the cash flow dynamics of the business from both a historical and forward looking perspective.

Cash Flow Forecasting explains how to:
* Determine appropriate cash flow figures from pro forma financial statements
* Interpret detailed cash flow forecasts and understand the difference between profit and cash flow
* Conserve or generate cash in the short term
* Evaluate different methods of project evaluation
* Recognize the limitations of accounting information in valuing companies

*Inspired by basic entry level training courses that have been developed by major international banks worldwide
* Will enable students and those already in the finance profession to gain an understanding of the basic information and principles of cash flow forecasting
* Includes questions with answers, study topics, practical real world examples and extensive bibliography

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Budgets are like road maps -- they provide a direction for a corporates financial management. Balance sheets and statements of revenues also provide insights into how well a company is following that direction. But cash flow and cash flow forecasts are what guide the day-to-day itinerary for an organization. Budgets and cash flow are dynamic -- adjustments and changes can and should occur. If you understand what you are looking at, you can use cash flow to create better budgets and thus more accurate cash flow forecasting.Cash Flow Forecasting outlines the techniques required to undertake a detailed analysis of the cash flow dynamics of the business from both a historical and forward looking perspective. Cash Flow Forecasting explains how to: * Determine appropriate cash flow figures from pro forma financial statements * Interpret detailed cash flow forecasts and understand the difference between profit and cash flow * Conserve or generate cash in the short term * Evaluate different methods of project evaluation * Recognize the limitations of accounting information in valuing companies*Inspired by basic entry level training courses that have been developed by major international banks worldwide* Will enable students and those already in the finance profession to gain an understanding of the basic information and principles of cash flow forecasting* Includes questions with answers, study topics, practical "e;real world"e; examples and extensive bibliography

Inhalt

Cover 1
Contents 6
Preface 10
1 Overview of cash flow forecasting 12
Introduction 12
What is a healthy cash flow? 14
What are the uses of cash flow forecasting? 17
2 Summary of financial statements 19
Introduction 19
The annual report and accounts 21
Statements of standard accounting practice, and financial reporting standards 22
Consequences of fraudulent manipulation of accounts 24
The auditors’ report 25
The balance sheet 26
Assets and liabilities 27
Assets 27
Liabilities 34
Summary 34
Debtors 35
Creditors 37
Stock and work in progress 38
Borrowing as shown in a company’s accounts 40
Banking facilities 40
Fixed assets 41
Depreciation 42
Book value 42
Authorized and issued share capital 43
Reserves 44
The profit and loss account 44
Turnover 45
Problems with financial statements and auditors 46
Conclusion 49
3 Factors impacting financial performance 52
Introduction 52
Strategic analysis – the external environment 53
Environmental analysis 54
PEST analysis 55
Competitive analysis 55
Strategic analysis – the value chain 57
Value chain competition example 59
Management 60
Profitability and performance 61
Return on equity 61
Net profit margin 62
Profitability and performance measurement 62
The profit margin and asset turnover relationship 63
Reliability of financial information 63
Asset management 65
Asset turnover and liquidity 65
Stock turnover 67
Collection period 68
Payment period 68
Net working assets to sales and overtrading 68
Capital structure 69
Financial leverage 69
Financial flexibility 72
Interest cover 73
Cash flow 74
Cash and profit 74
Operational cash flow 76
Cash flow forecasting 77
Percent-of-sales forecasting 78
Forecasting methodology 80
Sustainable growth 80
Corporate failure 81
Reasons for failure 82
Recent research 83
Failure prediction models 84
4 Cash flow forecasting of financial statements 87
Why cash flow analysis? 87
Purpose of projections 90
Historical performance and variable input analysis 92
Defining the initial assumptions 93
Procedure for constructing projections 94
One approach to constructing projections 95
Profit and loss statement projections 97
Net sales projections 103
Evaluating volume and pricing components 106
Relating a firm’s performance to industry and economic conditions 107
Example 109
Completing the profit and loss projections 110
Cost of goods sold/gross margin projections 111
Selling, general and administrative expense (SGA) 114
Operating profit 114
Example 115
Profit before tax 116
Balance sheet projections 120
Assets 123
Fixed assets, capital expenditure and depreciation 125
Example 125
Inventory turnover 126
Example 127
Accounts receivable turnover 128
Example 128
Cash and marketable securities 129
Example 130
Liabilities 130
Current liabilities 130
Accounts payable 131
Example 131
Accrued expenses payable 132
Debt runoff schedule + future facility 133
Example 134
Net worth 136
Example 136
New money need 136
Amortization schedule for new debt 140
Completed AmaOS forecasted balance sheet 142
Cash flow projections 145
Construction and evaluation of future cash flow model 145
Cash flow ratio analysis 155
Interest cover ratio 155
Financing payments cover ratio 156
Total debt payout 156
Long term debt payout 157
Debt service ratio 157
Sensitivity analysis 157
Protection and control in term lending 161
Covenants, events of default, and their relationship to projections 161
Conclusion 164
Chapter self-test 166
Chapter self-test answers 169
5 Cash flow forecasting of project finance 171
Introduction 171
Details of project and borrower 172
Cash flow forecasting 174
Step one 174
Observations 174
Step two 175
Observations 176
Step three 177
Observations 178
Step four 178
Observation 181
Conclusion 182
6 Pro forma forecasts using AMADEUS electronic databases 183
Appendices 196
1 Credit rating agency rating scales 197
2 Country risk criteria 200
Political risk profile 200
Economic risk profile 201
S& P’s sovereign rating profile
3 Summary of lending types 210
4 Complete AmaOS spreadsheet 211
Suggested reading 220
Glossary 221
Profitability indicators 248
Turnover and efficiency indicators 249
Financial position indicators 250
Cash flow terms 251
Cash ratios 251
Index 254
A 254
B 255
C 255
D 257
E 257
F 257
G 258
H 258
I 258
J 259
K 259
L 259
M 259
N 260
O 260
P 260
Q 261
R 261
S 261
T 262
U 263
V 263
W 263
Y 263
Z 263

Produkt-Details

• Erscheint lt. Verlag: 12.10.2005
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Rechnungswesen / Bilanzen
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Unternehmensführung / Management
• ISBN-10: 0-08-049253-3 / 0080492533
• ISBN-13: 978-0-08-049253-7 / 9780080492537