Working Capital Management Concepts Worksheet
Concept Application of Concept in the Simulation Reference to Concept in Reading
Cash Inflow
The movement of money into (cash inflow) and out of (cash outflow) a business. It is generally defined as net profit plus depreciation (net cash flow) but may be used more loosely to include all cash movements. ( Credo, 2003, p.1)
A situation in which cash receipts exceed cash payments. ( Credo, 2007, p. 1)
Adapt the balance sheet formula for wealth planning; Create a balance between the client's investment portfolio and lifestyle support, non-lifestyle expenditures, retirement support, and legacy needs; Build an investment needs hierarchy;
Define and manage needs horizons; Construct the client's portfolio; and Rethink the portfolio rebalancing process. (Loury, 2008, p. 3) Most use discounted cash flow or “DCF,” and for many companies DCF means IRR, not NPV. For “normal” investment projects with an initial cash outflow followed by a series of cash inflows, there is no difficulty in using the internal rate of return to make a simple accept/reject decision (Allen F., R., Brealey R., Myers S., 2005, p. 38)
Cash Outflow
Two important financial concepts in the construction industry are positive cash flow and debt coverage ratio. Positive cash flow simply means that a company's cash inflow exceeds its outflow. Inflow is the amount of money received from customers, lenders and investors. Conversely, outflow represents expenses paid to one's employees (in salaries, wages and benefits), suppliers and creditors. Much like a person's medical vital signs, a business' cash flow--also referred to as profit margin--is a fundamental performance benchmark from which one can gain a quick, yet comprehensive, grasp of a company's financial well-being. (Sweet, 2008, p. 5)
Expenditure in cash or cheques. ( Credo, 2007, p. 1)
The movement of money into (cash inflow) and out of (cash outflow) a business. It... [continues]
Concept Application of Concept in the Simulation Reference to Concept in Reading
Cash Inflow
The movement of money into (cash inflow) and out of (cash outflow) a business. It is generally defined as net profit plus depreciation (net cash flow) but may be used more loosely to include all cash movements. ( Credo, 2003, p.1)
A situation in which cash receipts exceed cash payments. ( Credo, 2007, p. 1)
Adapt the balance sheet formula for wealth planning; Create a balance between the client's investment portfolio and lifestyle support, non-lifestyle expenditures, retirement support, and legacy needs; Build an investment needs hierarchy;
Define and manage needs horizons; Construct the client's portfolio; and Rethink the portfolio rebalancing process. (Loury, 2008, p. 3) Most use discounted cash flow or “DCF,” and for many companies DCF means IRR, not NPV. For “normal” investment projects with an initial cash outflow followed by a series of cash inflows, there is no difficulty in using the internal rate of return to make a simple accept/reject decision (Allen F., R., Brealey R., Myers S., 2005, p. 38)
Cash Outflow
Two important financial concepts in the construction industry are positive cash flow and debt coverage ratio. Positive cash flow simply means that a company's cash inflow exceeds its outflow. Inflow is the amount of money received from customers, lenders and investors. Conversely, outflow represents expenses paid to one's employees (in salaries, wages and benefits), suppliers and creditors. Much like a person's medical vital signs, a business' cash flow--also referred to as profit margin--is a fundamental performance benchmark from which one can gain a quick, yet comprehensive, grasp of a company's financial well-being. (Sweet, 2008, p. 5)
Expenditure in cash or cheques. ( Credo, 2007, p. 1)
The movement of money into (cash inflow) and out of (cash outflow) a business. It... [continues]
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