Cash Flow Management for BusinessesBy a Speaker and Trainer endorsed by Microsoft, MIT Enterprise Forum and CGMA on Strategic Finance

A straightforward and practical guide to value centric cash flow management

2© Rizwan Khan, 2015

Cash Management for Businesses

A guide to maximizing your business value through managing

your cash flows in the best way.

Increasing the value of your business by hundreds of thousands of

dollars.

Avoid common cash flow mistakes that destroy businesses.

All in 70 slides with straight forward and instantly applicable insights.

No need for reading a lengthy book or attending a long workshop.

Handbook for developing and refreshing your skills of cash

management.

3© Rizwan Khan, 2015

Cash Management for Businesses

Rizwan Khan

Section 1: Why is Cash King?

Section Number & Name Aims

1. Why is Cash King? 1. Introduction to the course and aims2. Overview of importance of cash to businesses3. Difference between profitability and cash

2. Overview of Financial Statements

1. What is the income statement and what does it show?2. What is the balance sheet and what does it show?3. What is the cash flow statement and what does it show?

3. Financial Management 1. What is working capital and operational cycle?2. What is cash spent on?3. How to utilize financial management?

4. Cash Management for Growth 1. Is the expenditure leading to achievement of goals?2. Is the overspending teaching us to spend less?3. Is utilization of cash based on output?

4. Hidden Cash 1. Finding the hidden cash resource2. A case study overview

6. Case Studies and Discussions 1. Several experiences and advice related to cash management issues.

5

What Makes Cash King?

• Cash lets a business grow

• Cash lets a business develop products

• Cash lets a business develop capacity

• Without cash a business dies

• Greatest risk for a business is liquidity risk i.e. running

out of cash

6

What is Cash the King of ?

• Cash is the king of “achieving business goals”

• Without cash a business cant have resources to achieve your set

objectives

• A good plan without cash to back it up is not a very good plan

• Cash is the resource that enables the securing of other resources

• Cash is the king of the business world as this is the resource is

needed by every business

7

Cash Vs Profitability

• Being profitable is generating more revenue than costs

• Cash is the actual amount of cash coming in and out of

business

• You can be profitable and have “no cash”

• But you don’t want to have “no cash”

• Cash Management allows you to be smart with the cash you

have

• Purpose of “business” is to generate cash

• To generate cash the product should be inline with what

market wants

•A great product with no customers will not generate cash

• Keep the customers close in developing products and

avoid running out of cash!

Aim to generate cash

9National Entrepreneurship Network© John Mullins, 2012

Where does Cash come from?

• Capital Investments into business

• Sales that are paid for !

• Sale of equipment

• Borrowing money but this has an attached

cash outflow too

10© John Mullins, 2012

Where does cash go?

• Business Expenses

• Buying equipment

• Buying resources

• Operational costs

11

Time relevance of Cash Flows

• A business needs to make payments at certain times

• These payments should be planned for

• A business should have enough cash to make those payments

• This enables a business to run its operations as planned without setbacks

• Time is measured in days

• Cash & Profitability are not the same.

• Without cash management it will be very difficult managing my

goals.

• Timing is crucial factor of cash management.

• Cash is oxygen for business. Cant live without it.

• My product is of no use if the customers wont give me cash for it.

• My marketing efforts are of no use if I wont generate cash.

Summary

13© Rizwan Khan, 2015

Cash Management for Businesses

Rizwan Khan

Section 2: Overview of Financial

Statements

The Three Statements

• Statement of Income or Profit/Loss Statement

• Statement of Financial Position

• Cash flow statement

Terms to Know

• Assets- Valuables that a business owns

• Liabilities- Promise to pay an obligation

• Revenue- Money generated from sales

• Costs/Expense- Money spent on activities

• Expenditure- Expense is a Form of Expenditure but expenditure is

generally associated with spending money on assets.

16

Income Statement

• How much money we have or will have made and spent

over a period of time?

• Shows Financial Performance

• Shows the revenue

• Shows the costs associated with selling, operations and

tax/dividends

Revenue

Cost of Sales

Gross Profit

Operating Costs

Operating Profit

Other Costs

Interest expense

Net Profit before tax

Tax

Profit After Tax

xxx

(xxx)

xxx/(xxx)

(xxx)

xxx/(xxx)

(xxx)

(xxx)

xxx/(xxx)

(xxx)

xxx/(xxx)

Format

ExampleSource: velocity.uwaterloo.ca

19National Entrepreneurship Network© John Mullins, 2012

Statement of Financial Position

• How many valuable things we own and how many

things do we owe plus what is our equity

(shareholdings+ money made & held till date) at a

chosen point in time?

• Assets= Liabilities+Equity

• Shows Financial Health

Total Fixed Assets xxx

Total Current Assets xxx

Total Assets xxx*

Equity (Shares/Earnings)

Current Liabilities xxx

Non-Current Liabilities xxx

Total Liabilities xxx

Total Equity+Liabilities xxx*

*The two totals should balance at the end

Format

Example: Statement of Financial

Position

22National Entrepreneurship Network© John Mullins, 2012

Cash Flow Statement

• How much cash has entered in and exited from the

business?

• What is the net cash flow over a period of time?

• What is the cash flow from operations, investing

and financing activities ?

Net Profit xxx

Cash Adjustments xxx/(xxx)

Operating Cash Flow xxx/(xxx)

Cash Flow form Investing Activities

Capital Purchase (xxx)

Sale of Equipment xxx

xxx/(xxx)

Cash Flow from Financing Activities

Issue of equity xxx

Dividends Paid (xxx)

xxx/(xxx)

Net cash flow xxx/(xxx)

Format

Example: Cash Flow Statement

Source: velocity.uwaterloo.ca

• Income statement shows financial performance displaying revenue, costs

and profits

• Statement of Financial Position shows financial health displaying assets,

liabilities.

• Cash Flow statement shows the cash inflows and out flows of a business.

Summary

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