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Cash Flow

This document provides an overview of cash flow management, detailing its types—operating, investing, and financing cash flows—and their significance for financial health. It emphasizes the importance of cash flow analysis through projections, statements, and ratios for effective financial planning and decision-making. Understanding these components is crucial for ensuring business sustainability and growth.

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5 views12 pages

Cash Flow

This document provides an overview of cash flow management, detailing its types—operating, investing, and financing cash flows—and their significance for financial health. It emphasizes the importance of cash flow analysis through projections, statements, and ratios for effective financial planning and decision-making. Understanding these components is crucial for ensuring business sustainability and growth.

Uploaded by

shivamprashad704
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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UNIT 4 FINANCIAL APPRAISAL OF PROJECT (Understanding the Components of

Cash Flow Management)

Financial
Appraisal
of project
(Cash Flow)
Introduction
This presentation covers the essential components of cash flow, focusing on its types,
analysis, and significance for financial health.

MEANING OF CASH FLOW

Cash flow refers to the movement of money, either into or out of a


business, project, or financial product. It essentially tracks the
amount of cash a company generates or spends over a specific
period. Understanding cash flow helps assess a company’s ability to
meet short-term obligations and sustain operations.
01 Types of Cash
Flow
Operating Cash Flow

Operating cash flow refers to the cash generated


from core business operations. It reflects the cash
coming in and going out due to normal business
activities, excluding investments and financing
activities. Positive operating cash flow indicates
that a company can generate sufficient revenue to
sustain its operations.
Investing Cash Flow
Investing cash flow consists of cash transactions for the purchase and sale of physical
and financial investments. It includes cash spent on capital expenditures to acquire new
assets and cash received from the sale of investments. Understanding investing cash
flow is crucial for assessing how a company invests in its growth.
Financing Cash Flow
Financing cash flow includes cash transactions that involve raising capital or returning
funds to investors. This encompasses cash received from issuing equity or debt, as well
as cash paid for dividends or debt repayments. Analyzing financing cash flow provides
insights into how a company manages its capital structure.
02 Cash Flow
Analysis
Cash Flow Projections
Cash flow projections forecast future cash inflows and outflows based on expected
business activities. These projections are essential for financial planning, helping
businesses anticipate cash needs and avoid shortfalls. Accurate cash flow forecasting
allows organizations to plan for investments and manage working capital effectively.
Cash Flow Statements

A cash flow statement summarizes a company's


cash inflows and outflows over a specific period. It
is divided into three sections: operating, investing,
and financing cash flows. This statement provides
valuable information for assessing liquidity,
financial stability, and overall performance,
serving as a critical tool for investors and
management.
Cash Flow Ratios
Cash flow ratios are financial metrics that evaluate a company’s ability to generate cash
relative to its liabilities and operating needs. Key ratios include the operating cash flow
ratio, free cash flow, and cash flow to debt ratio. These ratios offer insights into financial
health and operational efficiency, assisting stakeholders in decision-making.
Conclusions

Understanding cash flow components is vital for


financial management. By analyzing operating,
investing, and financing cash flows, businesses
can make informed decisions, ensuring
sustainability and growth. Effective cash flow
management contributes significantly to overall
financial health and strategic planning.
CREDITS: This presentation template
was created by Slidesgo, and includes
icons, infographics & images by Freepik

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