Three methods of preparing Cash Budget: 1.Receipt and payment method 2.Adjusted profit & loss method/Cash Flow Method 3.Balance Sheet Method.

Four easy steps to prepare cash budget: Define the period, Decide the desired cash position, estimate cash inflows outflows.

Calculate cash conversion cycle in 3Steps. Step#1 Calculate Avg. Inventory, A/R and A/P. Step#2 Calculate DIO, DSO, DPO. Step#3 Calculate CCC.

Free Cash Flow (FCF) indicates that a company is financially sound, and it has the ability to grow and pay its debts and dividends.

The "impact" relates to how the cash flow has changed when there is positive and negative fluctuation in working capital.

Cash flow vs. Profit- Cash Flow represent the liquidity of the company while profitability represents the income and expenses of the company.

Using cash flow analysis ratios, a company seeks out how much cash it has, where its cash is going, and what it needs to do to maintain!

Cash Flow Statement helps to track cash inflow and outflow. CFS has three main parts: operating, investing, and financing activities.

Calculate WC for the current and previous year. Calculate changes in Net Working Capital by subtracting Previous WC from Current WC.

Working Capital is the leftover amount after paying operating expenses whereas the Current Ratio determines the efficiency of current assets over current liabilities. 

5 best ways to get working capital are Trade Credits, Invoice Factoring, Invoice Financing, Line of Credit, and Business Credit Cards.

Working Capital and Cash Conversion Cycle are distinct terms and work together under the operating mechanism because of the same major items.

Five effective working capital management strategies are Cash Management, Inventory Management, Debtor's Management, Creditor's Management, and Short-term Debt Management.

While calculating working capital (WC), have you ever found a negative working capital? Or confused between positive working capital or […]