A cash flow statement is a listing of the flows of cash into and out of the business or project. Think of it as your checking account at the bank. Deposits are the cash inflow and withdrawals (checks) are the cash outflows. The balance in your checking account is your net cash flow at a specific point in time.
Working capital is an important part of a cash flow analysis. It is defined as the amount of money needed to facilitate business operations and transactions, and is calculated as current assets (cash or near cash assets) less current liabilities (liabilities due during the upcoming accounting period).
Cash flow and profitability are different. A cash flow statement lists cash inflows and cash outflows while the income statement lists income and expenses.
A cash flow statement shows liquidity while an income statement shows profitability.
A balance sheet is a financial statement that reports a company’s assets, liabilities and shareholders’ equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure.
Financial statements include: 1.Balance sheet 2.Income statement 3.Cash flow statement.
A project cash flow is a financial statement that shows the inflows and outflows of cash associated with a specific project over a defined period of time. It is an important tool for analyzing the financial viability of a project, as it helps to identify whether the project will generate enough cash to cover its expenses and generate a profit.
Typically, a project cash flow statement will include the following:
- Initial investment: This is the amount of money required to start the project, which includes the cost of equipment, materials, and other expenses.
- Operating expenses: These are the ongoing expenses associated with the project, such as labor costs, raw materials, and other costs required to keep the project running.
- Cash inflows: These are the amounts of money received by the project, such as revenue from sales or other sources.
- Cash outflows: These are the amounts of money paid out by the project, such as payments to suppliers, interest on loans, and other expenses.
By analyzing the project cash flow statement, it is possible to determine whether the project is generating enough cash to cover its expenses and generate a profit. It can also help identify areas where cost savings can be made or where additional revenue can be generated to improve the project’s financial performance.
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Project Planning and Management Study notes for M. plan Sem-II
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