Presented By:

palevinomo

CASH FLOW IN
CONSTRUCTION
 ASSETS LIABILITIES

A capital expenditure is the use A liability is a legally binding

of funds or assumption of a obligation payable to another
liability in order to obtain or entity. Liabilities are incurred in
upgrade physical assets. order to fund the ongoing
activities of a business.
Cash Flow
Cash flow is the net amount of
cash that an entity receives and
disburses during a period of
time.
- www.accountingtools.com
WHAT COMPOSES
CASH FLOW?

REPORTING WORKING CAPITAL DIVIDENTS

PERIOD CAPITAL EXPENDITURES
Working capital is A capital A dividend is a
A reporting period
the amount of an expenditure is payment made
is the span of time entity's current the use of funds to shareholders
covered by a set assets minus its or assumption of that is
of financial current liabilities. a liability in order proportional to
statements. The result is to obtain or the number of
(also:Accounting considered a upgrade physical shares owned.
Period) prime measure of assets.
the short-term
liquidity of an
organization.
 06/ 10

• Example
A business has 100,000,000php of accounts
receivable, 14,000,000php of inventory, and
COMPUTING
12.000,000 of accounts payable. Its working
capital is:
WORKING
14,000,000 Current assets - 12,000,000
Current liabilities = 2,000,000 Working
capital CAPITAL

CASH + MARKETABLE SECURITIES +

INVENTORY - ACCOUNTS PAYABLE - ACCRUED
LIABILITIES- SHORT-TERM DEBT = WORKING
CAPITAL
 How to Improve Your Working
Capital Situation

delay maintain lower

payments to inventory levels,
suppliers, since which also reduces
this is a source the risk of losses
of cash due to obsolete
inventory

same as “net
working
capital”
WHY YOU • to take advantage of volume discounts

MAY NEED offered by suppliers

• if your business is seasonal, you will need

MORE extra working capital to fund the

inventory required for the peak selling
WORKING season
• if customers force you to give them long
CAPITAL payment terms, then you need more
working capital to keep operations
running until their payments arrive
• extra working capital will be needed to
fund special projects, such as capital
investments
 Capital
expenditures
• funds paid out for
buildings
• computer
equipment
• Machinery
• office equipment
• Vehicles
• software
 Cash dividend

Stock dividend

Types of Property dividend

Dividends
Scrip dividend

Liquidating
dividend.
 How to Calculate
Free Cash Flow

FREE CASH FOR A OPERATING

FLOW FORMULA NONPROFIT CASH FLOW
Free cash flow =
ENTITY
Operating cash flow
Operating cash flow Nonprofit free cash = Net income +
- Working capital flow = Operating Depreciation +
changes - Capital
cash flow - Working Amortization
expenditures -
capital changes -
Dividends
Capital expenditures
 • SELLING OFF MAJOR CORPORATE ASSET
• Cutting back on or delaying capital expenditures
• Delaying the payment of accounts payable
• Accelerating receivable receipts with high-cost
early payment discounts
• Foregoing a dividend
• Cutting back on key maintenance expenditures
• Reducing marketing EXPENDITURES
• CURTAILING SCHEDULED PAY INCREASES
• THE RECEIPT OF A LARGE ADVANCE PAYMENT
FROM A CUSTOMER
• ENTERING INTO SALE AND LEASEBACK
ARRANGEMENTS FOR KEY ASSETS

CAUSES OF FREE CASH FLOW

CASH FLOW CASH FLOW CASH FLOW
FROM FROM FROM
OPERATIONS FINANCING INVESTMENT
ACTIVITIES ACTIVITIES
cash paid by
customers for come from debt come from
services or goods incurred by the gains on
provided by the
entity invested funds.
entity.

WHAT CAUSES CASH INFLOWS?

 CASH FLOW CASH FLOW FROM CASH FLOW FROM
FROM FINANCING INVESTMENT
OPERATIONS ACTIVITIES ACTIVITIES
expenditures made caused by the interest payments made into
as part of the and principal investment vehicles,
ordinary course of
payments made by the loans made to other
operations
entity, or the entities, or the
repurchase of purchase of fixed
company stock, or the assets
issuance of dividends
WHAT CAUSES CASH INFLOWS?
 CASH FLOW CASH FLOW RETURN CASH FLOW FROM
RETURN ON ON ASSETS OPERATIONS RATIO
SALES
Net profit + Non-cash Cash flow from
(Net profit + Non- expenses / Total operations / Net
cash expenses) /
Assets income
Total net sales

HOW TO ANALYZE CASH FLOWS

Cash Flow vs. Profits

Cash Flow Profit

represent the
represent the
excess of
difference
revenues over
between the
expenses
amount of cash
received and
cash paid