Introduction
Cash flow management involves tracking the inflow and outflow of money in a business to predict future financial positions and ensure sufficient funds to cover debts, such as paying employees and suppliers. Cash flow analysis determines a company’s working capital, which is the money available to run operations. Cashflow modelling forecasts future finances, while cash flow forecasting estimates a company’s future financial position.
Learning Objectives
By completing the Cash Flow Management, Analysis, Modelling and Forecasting Course, participants will:
- Interpret cash flow statements and ratios to identify positive and negative corporate performance.
- Understand the significance of cash flow analysis over balance sheet and income statement analysis.
- Assess free cash flow and a company’s capacity to meet financial commitments.
- Gain an overview of tools for realistically forecasting key cash flow drivers.
- Apply a methodical approach to evaluate the quality and sustainability of cash flow drivers, determine debt capacity, and manage debt servicing.
Training Methodology
This course includes:
- Lectures
- Seminars & Presentations
- Group Discussions
- Assignments
- Case Studies & Functional Exercises Xcelerate Training Institute follows the ‘Do-Review-Learn-Apply’ model for practical and effective learning.
Benefits for Your Organization
Organizations will benefit from:
- Assessing the quality and sustainability of cash flow drivers.
- Developing strategies for designing cash flow forecasts.
- Calculating debt capacity and servicing capabilities.
- Understanding the importance of cash, formulating cash budgets, controlling cash flows, and improving cash flow through debtor management.
- Learning practices to overcome debt and recover cash flow situations.
- Forecasting sales and traffic to manage cash flow effectively.
Benefits for You
Participants will gain:
- Skills and industry knowledge to advance their careers.
- Essential knowledge for managing cash flow.
- Ability to identify key cash flow drivers in a business.
- Structured approach to setting assumptions.
- Skills to align debt structure with forecast cash flows.
- Understanding of the benefits and limitations of cash flow forecasting.
- Ability to explain cash flow forecasts and debt service in credit
Target Audience
This course is aimed at anyone working in or looking to work in roles involving cash flow management, including:
- Financial professionals in credit risk analysis or relationship management positions.
- Individuals involved in assessing counterparty risk from an underwriting perspective or trade debtor exposure.
Course Outline
Introduction to Cash Flow Statement
- Understanding Cash Flow Movements
- Importance of Cash Flow Management
- Capital Structure
- Working Capital Management to Optimize Cash Flow
- Capital Investment Decisions
- Direct vs. Indirect Cash Flow
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
Understanding Working Capital Ratios
- Significance of Working Capital Ratios
- Determining Efficiency of Working Capital Management
- Current Ratio
- Liquid Asset Ratio
- Inventory Turnover Ratio
- Debtors Turnover Ratio
- Operating Cycle
- Cash Conversion Cycle (CCC)
Importance of ERP in Cash Flow Planning
- Sales
- Bill of Material
- Material Management
- Procurement
- Production
- Finance
Cash Flow Forecast
- Importance of Cash Flow Forecast
- Establishing Assumptions Based on Current Conditions
- Estimating Cash Inflows & Outflows
- Identifying Short Term Investments
- Exploring Sources of Funds
- Controlling Application of Funds
- Best Practices in Cash Management
Liquidity vs. Solvency
- Difference Between Liquidity & Solvency
- Understanding Solvency Ratios
- Shareholder Equity Ratio
- Debt Equity Ratio
- Interest Coverage
Capital Expenditure
- Capital Investment Appraisal
- Return on Investment
- Payback Period
- Net Present Value
- Internal Rate of Return
- Lease or Buy Decisions
Cost of Capital
- Borrowing Requirements
- Long Term vs. Short Term Borrowing
- Equity or Debt Capital?
- Dividend Policy
- Cost of Capital
- Weighted Average Cost of Capital
Case Studies
- Preparation of Direct & Indirect Cash Flow Statements
- Interpretation of Financial Statements of a Listed Company