Cash Flow Forecasting
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...
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This book outlines the techniques required to undertake a detailed analysis of the financial statements and projects of companies, understand the cash flow dynamics of the business from both a historical and forward looking perspective, and build cash flow projection models which can be subjected to sensitivity analysis.Cash Flow forecasts help you to build a model of the way in which cash moves within a project or organisation. They help you to predict whether the sales or income you forecast will cover the costs of operation. They also allow you to analyse whether a project will be sufficiently profitable to justify the effort put into it. Cash Flow Forecasting explains how to:* Analyse and understand financial statements-annual and proforma* Build cash flow statements from historical statements or project projections* Evaluate present and future cash flows by using specialised cash flow statement ratios* Identify key variables impacting financial performance so that they can be subjected to sensitivity analysis* Run sensitivity analyses to evaluate the cash flow and debt servicing ability of a company or project, and identify potential areas of concern* Interpret detailed cash flow forecasts and understand the difference between profit and cash flow* Conserve or generate cash in the short term* Optimally configure long term debt facilities so that they are aligned with the company or project's cash flow and debt servicing capabilities* Evaluate different methods of project evaluation* Recognize the limitations of accounting information in valuing companies
1Overview of cash flow forecasting12Summary of financial statements83Factors impacting financial performance414Cash flow forecasting of financial statements765Cash flow forecasting of project finance1606Pro forma forecasts using AMADEUS electronic databases172App. 1Credit rating agency rating scales186App. 2Country risk criteria189App. 3Summary of lending types199App. 4Complete AmaOS spreadsheet200
