Introduction
What is Cash Flow Management? Cash flow management is the process and procedure of tracking how much money is coming into and out of your business. This helps you predict and foresee how much money will be available to your business in the future. It also identifies how much money your business needs to cover debts, like paying employees and suppliers.
What is Cash Flow Analysis? A cash flow analysis determines and establishes a company’s working capital—the amount of money available to run business operations and complete transactions. That is computed as current assets (cash or near-cash assets, like notes receivable) minus current liabilities (liabilities due during the upcoming accounting period).
What is Cashflow Modelling? Cashflow modelling is created, designed and used by financial planners to forecast your future finances. It showcases in real-time how much money you could have in the future and whether you are on the path to achieving your goals.
What is Cash Flow Forecasting? Cash Flow Forecasting is the method of getting an estimate or forecast of a company’s future financial position and is the main planning component of financial management within a company.
This Course will provide participants with a comprehensive overview of Cash Flow Management, Analysis, Modelling and Forecasting. In this course, participants will practice and use Cash forecasting models which are generally organized along with short, medium and longer timeframes.
Course Objectives
On successful completion of Cash Flow Management, Analysis, Modelling and Forecasting Course, participants shall be able to:
- Interpret cash flow statements and ratios, and find positive and negative corporate performance
- Understand why cash flow analysis is more significant than the balance sheet and income statement analysis
- Assess and evaluate free cash flow and the capacity of companies to meet their financial commitments
- Get an intensive overview of the tools required to realistically forecast the key cash flow drivers in a business
- Apply a methodical approach to know the key drivers of cash flow in a business, to evaluate the quality and sustainability to ascertain a company’s debt capacity and debt servicing capability
Who Should Attend?
This qualification is aimed at anybody who is working in, or looking to work in, a role that involves handling cash flow.
Anyone looking for a refresher on or a deep dive into the topic of Cash Flow Management, Analysis, Modelling and Forecasting: Financial professionals in a credit risk analysis or relationship management position, or anyone involved in the assessment of counterparty risk from an underwriting perspective or trade debtor exposure.
Course Outlines:
Module 1: Introduction to Cash Flow Statement
- Understanding Cash Flow movements
- Understanding the importance of Cash Flow Management
- Capital Structure
- Working Capital Managementto optimize Cash Flow
- Capital Investment Decisions
- Direct versus Indirect Cash Flow
Module 2: Components of Financial Statement
- Balance Sheet
- Income & Expenditure Account
- Cash Flow Statement
- Statement of Changes in Equity
- Notes to Financial Statements
- Case Study- Cash Flow Statement – Walmart
Module 3: Understanding Working Capital Ratios
- Significance of Working Capital Ratios
- How to Determine the Efficiency of Working Capital Management?
- Current Ratio
- Liquid Asset Ratio
- Inventory Turnover Ratio
- Debtors Turnover Ratio
- Operating Cycle
- Cash Conversion Cycle (CCC)
Module 4: Importance of ERP in Cash Flow Planning
- Sales
- Bill of material
- Material Management
- Procurement
- Production
- Finance
Module 5: Cash Flow Forecast
- Importance of Cash Flow Forecast
- Establish assumptions based on Current Conditions
- Estimate Cash Inflow & Outflows
- Identify Short Term Investments
- Exploring Sources of Funds
- Controlling Application of Funds
- Best Practices in Cash Management
Module 6: Liquidity v/s Solvency
- Difference between Liquidity & Solvency
- Understanding Solvency Ratios
- Shareholder Equity Ratio
- Debt Equity Ratio
- Interest Coverage
Module 7: Capital Expenditure
- Capital Investment Appraisal
- Return on Investment
- Payback period
- Net present Value
- Internal Rate of Return
- Lease or Buy Decisions
Module 8: Cost of Capital
- Borrowing Requirements
- Long term V/s Short Term Borrowing
- Equity or Debt Capital?
- Dividend Policy
- Cost of Capital
- Weighted Average Cost of Capital
Module 9: Case Studies
- Preparation of Direct & Indirect Cash Flow Statements
- Interpretation of Financial Statements of a Listed Company