CASH FLOW ANALYSIS
is the movement of money into or out of a business, project, or financial
product. It is usually measured during a specified, limited period of time.
Measured of cash flow can be used for calculating other parameters that give
information on a company's value and situation. Cash flow can be sued, for
example, for calculating parameters; it discloses cash movements over the
determine a project's rate of return or value. The time of cash flows into and
out of projects are used as inputs in financial models such as internal rate of
return and net present value.
determine problems with a business's liquidity. Being profitable does not
necessary mean being liquid. A company can fail because of a shortage of cash
even while profitable.
alternative measure of a business's profits when it is believed that accrual
accounting concepts do not represent economic realities. For instance, a
company may be notionally profitable but generating little operational cash (as
may be the case for a company that barters its products rather than selling for
cash). In such a case, the company may be deriving additional operating cash by
issuing shares or raising additional debt finance.
can be to evaluate the 'quality of income generated by accrual accounting. When
net income is composed of large non - cash items it is considered low quality.
evaluate the risks within a financial product, e.g., matching cash
default risk, re - investment requirements, etc.
notion is based loosely on cash flow statement accounting standards. It's
flexible as it can refer to time intervals spanning over past - future. It can
refer to the total of all flows involved or a subset of those flows. Subset
terms include net cash flow, operating cash flow and free cash flow.
Sources of cash
Sources are development by the money rotation in nay business. External Sources
are finance development due to shares and loans.
Sources of cash
2. Bank loan
of a property
Cash In Flow
contain the following
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2. By loan
3. Bank loan
or industrial loan or business loan
4. By sales
from external investment
6. By sales
Cash out flow
of raw material
3. Issues of
expenses like salary, maintenance etc.
cash inflow and outflow are analyze in cash flow analysis.