BU121 Lecture Notes - Cash Flow Statement, Cash Cash, Cash Flow
Document Summary
Cash is currency of business: businesses that show profit can still go bankrupt (profit doesn"t equal cash) Creating a statement of cash flows: adjust profit to show impact on cash) Cash (survival) breakeven is when ebdat = 0: calculating ebdat, breakeven, driving breakeven (contribution margin and. Creating a cash budget: developing worksheet- to manage timing of cash inflows and outflows, format and process. Principle 1: real human, financial capital must be "rented" from owners. Principle 5: venture"s financial objective is to increase value: different analytical measures are important to different users at different stages. How quickly ventures uses cash- cash burn rate. Venture"s ability to meet short term financial obligations (pay bills)- Length of operating/working capital cycle- conversion period (from: development and startup issues: liquidity receivables to cash, survival issues. Venture"s potential to employ and repay debt- leverage. Venture"s ability to provide return on invested capital - profitability/efficiency. Liquidity- ability to meet short term obligations liquidity)
