Forecasting the Cash Flow Statement

One question I’ve been asked a few times is – “Can GrowthCast model all the types of cash flows included in the Cash Flow Statement?”  The quick answer is yes.

While GrowthCast was built to model your cash flows from operations, there’s no reason you can’t use it to forecast the implications of cash flows from financing and investing.  While QuickBooks and other accounting packages can tell you what happened last month, last quarter, or last year, cash flow forecasting gives insight into how your activities can affect your future.

To use GrowthCast to forecast cash flows from investing and financing, the key is to match the pattern of cash flows to the right pattern in the income types.  I’ll give some examples

• Investing Activities
  • Purchase of an Asset
    • List the payment price (or note payments) as an expense

    

• Sale of an asset
  • If the payment is received in multiple payments that are the same amount use the “Fixed Rate” income type
  • If the payment is received in one payment, or multiple payments of differing amounts, use the “Fixed Price” income type
  • Any costs associated with the sale can also be modeled as well, just by adding them as costs to the income streams
  • Financing Activities
    • Sale of equity
      • Use the “Fixed Rate” income stream with the estimated dates and amounts of investment.
• Borrowing
  • Use the “Fixed Rate” income stream with the estimated dates you’ll receive the funds
• Receipts of Dividends
  • Use the “Fixed Rate” income stream if you expect the dividends to be close to the same each period
  • Use the “Fixed Price” income stream if you expect the dividends to differ each period

  

As you can see, GrowthCast is pretty flexible out of the box, but if this is something you’d like to see enhanced, we’d love to talk to you.  You can leave a comment below, or as always, contact us at support@Growth-Cast.com