Budget
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Different from cash flow - projects all the costs that will be incurred by
organization over a period of time and allocates those expenses evenly
over a time period
Cash Flow
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, Actual cash that flows into the firm minus the cash that goes out of the firm.
Not the same as profit
Why is this important? Generating profit does not put cash in the bank right
now.
You may notreceive the cash until a later time. You could be profitable but
suffering from negative cash flow.Absence of cash flow is the greatest
reason companies fail, viability of the business is determined by cash flow•
Simplest terms - you must be bringing in more cash than you are spending•
All expenses must be accounted for in the cash flow statement•
Revenues (cash inflow) should be accounted for by categories
Current Assets
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Those assets that can be quickly converted into cash, such as Accounts
receivable
Income Statement (aka Profit and Loss Statement)
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Document that shows a firm's revenue minus expenses
Focus of the income statement is profit not cash flow•
Key to predicting pro-forma income statement is predicting sales / revenue
(amount earnedcalculated by multiplying Price x Quantity)
• Provides both gross (before anything is taken out) and net profit (after
expenses) figures
Give this one a try later!
Different from cash flow - projects all the costs that will be incurred by
organization over a period of time and allocates those expenses evenly
over a time period
Cash Flow
Give this one a try later!
, Actual cash that flows into the firm minus the cash that goes out of the firm.
Not the same as profit
Why is this important? Generating profit does not put cash in the bank right
now.
You may notreceive the cash until a later time. You could be profitable but
suffering from negative cash flow.Absence of cash flow is the greatest
reason companies fail, viability of the business is determined by cash flow•
Simplest terms - you must be bringing in more cash than you are spending•
All expenses must be accounted for in the cash flow statement•
Revenues (cash inflow) should be accounted for by categories
Current Assets
Give this one a try later!
Those assets that can be quickly converted into cash, such as Accounts
receivable
Income Statement (aka Profit and Loss Statement)
Give this one a try later!
Document that shows a firm's revenue minus expenses
Focus of the income statement is profit not cash flow•
Key to predicting pro-forma income statement is predicting sales / revenue
(amount earnedcalculated by multiplying Price x Quantity)
• Provides both gross (before anything is taken out) and net profit (after
expenses) figures
