The Financial Budget and Cash Flow is one of the most important operational tools in our company or enterprise. His performance can influence the course of economic and financial action of the company.
When we evaluate the business is as important to consider how much we earn, as well as they can lose.
develop a cash flow this must be analyzed from the economic standpoint, and from the financial standpoint. We analyze it to see if I can carry the business forward and that is what I do.
We note that the economic equation refers to accounting profit of the business (positive or negative), regardless of when collecting or expenditures of funds, while the financial equation is directly related to the time of receipt or payment of transactions.
For these reasons, we can see that a business can be viable economically, but a financial deficit which, if not solved in time, will lead to failure.
To develop a cash flow and cash flow, should be listed in advance deemed all cash receipts and disbursements for the period of preparation of the flow, so it should follow the following steps:
- Set the period that seeks to cover.
- Make a list of likely income and specified period of outlays. In this case, after recording the values of each cost center values are added together and you get the total. It lists the obligations that involve cash outlay, adding the value of each payment to get the total.
- Once we have obtained the total revenues and expenditures, these are subtracted to obtain the result. If the result is positive, it means that revenues are greater than outflows and therefore there is a surplus, indicating that the company operates favorably. Otherwise, the employer must consider measures to cover or anticipate missing periods in which the results are negative, reflecting this information in a game called balance at end of period.
- If you want to work the cash flow in more detail, we can use a cumulative balance is the sum of the balance achieved during the period plus the balance of the previous period.
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