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SET THE CONTEXT
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MARKET ANALYSIS AND BUSINESS POSITIONING
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DEVELOP YOUR SALES FORECAST
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DEVELOP YOUR OPERATIONAL AND COST PLAN
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DEVELOP YOUR CASH FLOW PROJECTIONS
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DETERMINE YOUR FINANCING STRATEGY
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INTERPRETING THE INCOME STATEMENT
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INTERPRETING THE BALANCE SHEET
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INTERPRETING THE CASH FLOW STATEMENT
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CONCLUSION
How to Read a Cash Flow Statement
COMPONENTS OF A CASH FLOW STATEMENT
- 3 main sections
- Cash from operating activities
- From customers
- Less suppliers, employees and government
- Positive figures indicate more cash
- Negative figures indicate less cash
- Cash from investing activities
- Long-term capital assets
- Negative figure indicates purchases
- Positive figures indicates sales of old assets
- Cash from financing activities
- Repayment of debt and loans
- Capital contributions and withdrawals
- Negative figure means the business used cash to pay back loans/owner withdrawals
- Positive figure means cash came in from outside to finance activities
- It’s a good sign if cash from operating activities is enough to cover financing and investing activities
- Cash at the end of the year is the cash in your bank account or petty cash
- Cash from operating activities