Cash Flow Analysis – Basics, Benefits And How To Do It
The most important part of financial management is cash flow analysis. It is what guides the people amid the storm of fluctuating economies and unpredictable markets. Every entity intending to achieve economic and growth stability needs to understand cash flow comprehensively and what it includes.
For those who wish to enhance their comprehension, taking online accounting training courses can offer priceless insights into becoming an expert in this vital area of financial administration. Let’s get down to business now, starting with the essentials of cash flow analysis, discussing its many advantages, and then explaining how to do it properly.
What is exactly cash flow analysis?
In cash flow analysis, the concentration is on the amount of cash that enters and leaves the organization in a specific period. It serves financial managers to make inquiries into an organization’s liquidity, solvency and general financial health. This process helps them determine whether they can repay their debts on time, run their operations with cash, and look for ways to grow by seeing how money passes through their hands.
Components of cash flow analysis
There are three main parts to a cash flow analysis:
1. Operating Cash Flow (OCF): This is the amount of the money which a business earns or spends on its day-day activities. It is made up of proceeds accruing from sales, as well as payments to the wholesalers, salaries, and other expenses of running the business.
2. Investing Cash Flow (ICF): ICF tallies the type of cash flow that you make when you buy or sell assets, invest in stocks, or buy other businesses.
3. Financing Cash Flow (FCF): This sort of cash flow indicates sources of cash entering into the business through financial activities such as new money, dividends, buying or selling shares, and debt repayments.
Importance of cash flow analysis
Liquidity management: Short-term cash flow analysis allows companies to be solvent and have enough liquid funds to cover required short-term debts and unexpected expenses.
Solvency assessment: It gives you an insight into how well a company would deal with long term financial obligations such as servicing the debts and making capital purchases.
Decision making: Through a strong-cash-flow-analysis you will be able to make business strategies that show trends, cash gaps, and investment opportunities that probably will work.
Advantages of cash flow analysis
1. Enhanced financial planning
A strong financial scheme is all about proper cash flow analysis. Businesses could arrange their financing needs, manage their assets well, and not experience any cash gap or excesses by forecasting their cash flows. Professionals who take online accounting training courses can start planning their finances better once they know what they’re doing.
2. Better management of working capital
Learning how inflows and outflows of cash affect working capital is crucial for effectively managing them. Organizations can stick to their financing costs, and improve their working capital’s turnover by adjusting their receivables, payables, and inventory amounts according to their cash flow projection.
3. Better risk management
A cash flow analysis anticipates problems and allows companies to take preventative measures. Businesses can work in advance preparing what to take if something’s gone wrong, looking at how volatile is their source of income or how sensitive they are to changes in the market and finally how much cash they might have at hand.
4. Investor confidence
Both investors and lenders rely on the cash flow analysis that properly outline. Through demonstrating that they are great at managing their funds as well as getting the right flows and they trust the investors, businesses can obtain money on good conditions and get their trust.
How to conduct cash flow analysis?
Step 1: Get financial data
Organize your paperwork, income statements, balance sheet, and cash flow for the period you want to cover. Be sure that the details are accurate, complete and in their latest versions.
Step 2: Get operating cash flow
Start with net income and then subtract non-cash expenses, depreciation and changes in working capital like accounts due and receivable etc., the other non-operating items.
Step 3: Assess investing and financing factors
Having the cash flows from investing and financing analyzed, one can notice their effect on the total cash flow. Think of key events, like acquiring assets, settling loans, or giving out dividends, and work out what they mean to the company’s liquidity and capital structure. By accessing online accounting training courses one can gain insights into their impact on overall cash flow dynamics.
Step 4: Analyze the results and get conclusions
See in the cash flow statement for trends, awkwardness and red flags. If you want to generate a profitable cash flow, compare your current cash flow performance with industrial benchmarks and your own past data. Analyze the findings, and find ways to make your cash flow healthier.
Step 5: Implement strategies for improvement
Various strategies should be followed to enhance the cash flow management based on the cash flow analysis results. It could encompass increasing operating capital, re-negotiating payment conditions, deriving new income sources, or refinancing debt, among other ways.
In conclusion
Cash flow analysis is an essential part of financial management as it gives a lot of information about the company’s finances, how well it nurtures finances and what are its short-term and long-term objectives. Companies can really benefit from how they take the chance to learn the basics of cash flow analysis.
A business can competently and effectively venture into the complex business world of today with a proper cash flow analysis and the right tools to do it. Online accounting training courses help people learn how to do cash flow analysis, which gives professionals and people who want to start their own businesses the power to use it to its fullest.
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utopia
all nazis and fascists poof off the planet
world hunger and poverty is eradicated
whatever tech/info the government is hiding is used to revive the planet's flora/fauna
whatever tech/info the govt is hiding is used to cure diseases of all kind
no more capitalism
self-sustainability and secret tech for energy
no more military industrial complex
no more police and prisons
everyone has free healthcare, safety, and freedom
free education
no borders
anyone who wants to leave the planet can
i know this sounds almost insane. but consider that the us government alone "loses" trillions of dollars. also consider the reality of alien contact/recovered tech.
we could be living in .. 4024 right now.
doesn't that blow your mind?
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We all know I shouldn’t be allowed to make Tumblr posts after 1 AM, but here we go again… This has been in my brain for so long so now I am going to ramble about it (shoutout to the Hamlet Discord server for joining in the Thinking)
Surveillance Hamlet!!!
(Or, rather, the theme of surveillance in Hamlet and some fun and exciting ways I’d like to see it portrayed on stage assuming this mythical theater program has unlimited money)
(Warning- this thought is undercooked. This is going to get rambly…)
Surveillance is a major theme in Hamlet. Nearly everyone in the play engages in some kind of spying or scheming or is the victim thereof (or both). I love plays as a medium for the fact that each individual performance has the opportunity to completely change which themes get the most emphasis and surveillance is a theme I’d love to see take center stage with Hamlet specifically!
Hamlet is a pretty meta play. It ends with a message on the act of storytelling within the specific context of the story the audience has just watched just after it calls out the “mutes and audience” to the ultimate tragedy for their inaction during the runtime of the play. It’s also been performed and adapted plenty of times with a modern lens. Grief, depression, existential anxiety, and gay people are, apparently, universal pieces of the human experience, but if anything looms larger than ever over today’s society, it’s surveillance. Hell, I’m typing this on a device that is for sure selling my data to the government and probably also scam artists! So give me a performance where extreme surveillance heightens all the other aspects of the play, where Hamlet’s paranoia is exceedingly justified.
First, choose a good venue. Outdoor theater is almost always my favorite, but in this case, choose a massive indoor theater with a movie theater style sound system. Hang massive screens above the stage like you’d see at a big concert.
Now, these actors are going to be doing some major method acting. Put cameras above the stage at all angles. Put cameras in the wings. Put cameras on the crew. Put cameras in the audience- maybe some employee plants instructed to stream the show to the screens from their view or even to obnoxiously take photos and video throughout the show. No matter where these actors go, so long as they’re in character, there’s a camera on them. Put mics everywhere too, so even low whispers are heard from the backrow.
I want this play to start with an attempt at secrecy. The ghost appears, Hamlet begs his friends not to speak of it, but he can hear his whispers echoing right back to him and he knows it’s useless. The curiously missing line where Marcellus, Horatio, and Barnardo do finally swear upon Hamlet’s sword isn’t implied to be there as usual. It doesn’t exist. The ghost is only “satiated” by the coming of dawn, even this first, simple wish remains unfulfilled.
Hamlet spends the end of act 1 wavering between a genuine breakdown and an acted portrayal of madness. Pretending shields him from showing legitimate emotion on those screens.
To be or not to be is performed offstage, but on camera. Hamlet seems to think for a moment that he’s truly alone or perhaps it’s all part of the facade. Either way, emotion gets the best of him eventually and he realizes he can’t escape the cameras (or mortality). He comes on stage for get thee to a nunnery, frantically trying to get away from his ever-echoing voice, only to find a spotlight on him. The lines come across as cruel as they are pathetic. Ophelia is also being watched. Ophelia didn’t decide alone to speak to him. In some ways, she has far less privacy than he does, but Hamlet isn’t looking for solidarity in the watched. He wants to be alone. He wants to not be seen.
When he stabs Polonius, Ros & Guil track him down on the cameras. There’s no need to run, but he tries.
The only time Hamlet is truly outside of surveillance is on the ship to England (and then with the sailors who return him to Denmark). Maybe Claudius doesn’t want the world to know he has sent the prince to be executed, but it is clear that he too has lost any real control of this surveillance system. You saw him praying. Or was it a publicity stunt? Hamlet returns and simply tells Horatio (and by proxy, you) what happened on the ship, maybe resentfully. The only time he gets privacy, he doesn’t need it.
By the final scene, he no longer wants not to be seen. He isn’t sure you see him at all. No, you mutes and audience look right through him as if you know infinitely more than him, as if he hasn’t proven that he knows he is a sparrow that will fall. But you know the lines and he doesn’t.
He asks Horatio to tell his story. Maybe there’s something personal about being told a story rather than watching one play out. Maybe you can’t look through a storyteller.
Hamlet canonically knows he’s being watched. He uncovers Ros & Guil’s spy mission in the span of minutes, kills Polonius in the act of spying on him, and comes to mistrust the people around him because almost no one seems to be genuine with him (besides horatio). But it’s not just the characters, it’s the audience. In his darkest moments, he looks out for just a second, almost begging for help, only to discover that no one is coming to his aid. When he tries to exit, the spotlight follows him and so do the cameras. It’s inescapable. When he delivers the “mutes and audience” line, it should be as accusatory as it is pleading. You, the audience, have seen his life projected on massive screens, you’ve heard his every word and whisper, you know him, don’t you? Yes, you know him better than his closest friends. He’s spilled his soul to you because he knows you can’t be escaped, that you, rows upon rows of darkness to this actor blinded by spotlights, are always watching. Will you help? he asks, one final time. The answer is an obvious no, not because you’re heartless but because that’s not why you’re here. You’re here to see a play.
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Tik Tok on the Chopping Block - 04/25/2024
Yesterday, Joe Biden signed the Tik Tok Divest-or-Ban bill into law. I covered this bill extensively in my post, "Tik Tok Bill/HR 7521" back on March 16th of this year. This bill forces ByteDance to sell Tik Tok within one year. It's clear to me that this Chinese owned company is controlled by the CCP and is using it to gather information on US citizens and influence children toward committing self-harm and suicide.
Tik Tok's CEO, Shou Zi Chew released the following video statement yesterday. "Make no mistake, this is a ban, a ban on you and your voice. We are confident, and we will keep fighting for your rights in the courts. The facts and the Constitution are on our side, and we expect to prevail again." He was referring to how they circumvented Trump's executive order to ban the app in the U.S. back in 2020. Tik Tok's position is that through China's Counterespionage Law, its customer data is stored in Virginia and backed up in Singapore. They claim that they have never or ever will share U.S. data with the CCP. Yet the owner of ByteDance previously issued a letter of apology to the CCP about failing to follow the CCP's directives. It's obvious to me that they are more of an arm of the CCP than a private company and we should not trust them. At the same time, I'm also conflicted about trusting our own government. Regardless it's now signed into law, like it or not.
Tik Tok and ByteDance together spent over $7 million since the beginning of this year on TV and digital ads in an effort to stop legislation from passing the bill. A Tik Tok spokesperson said this, "This expenditure reflects work we do to educate policy makers about how legislation could affect our community of 170 million American users." Tik Tok officials lobbied Congress and Biden's executive office last quarter. Biden's executive office contains the National Security Council, the Office Management and Budget, the Office of the U.S. Trade Representative, and other divisions.
As I mentioned in my previous post on this bill last March, Donald Trump and Elon Musk both came out against it. Trump is concerned that it could expand government powers on other platforms, and Musk is concerned about censorship. The bill is intended to remove any foreign influence and investment in social media platforms and websites here in the U.S. The government would have to prove that a foreign entity is directly involved and then initially force divestment, and then later if necessary deplatform the app and shut down their operating websites.
I'm all for private companies operating platforms that allow freedom of expression, but not if they're being operated by a foreign adversary like China's CCP. Yet I'm always very skeptical of our government and their tendencies to over-reach in order to go after their political opposition. Especially with this current bunch in charge. All we can do is to stay informed and hopefully for the sake of our freedom and security vote in Republican majorities in both the house and senate, and get Donald Trump back into office, in my opinion.
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