Join Jim Stice for an in-depth discussion in this video Managing financing cash flow, part of Running a Profitable Business: Understanding Cash Flow.
- The two sources of cash for financing activities…are Borrowing and Owner investment.…The most desirable sequence of decision-making…with respect to cash from financing activities…is as follows.…Forecast the level of activity such as level of sales.…Evaluate the amount of cash that will be generated from…or consumed by operating activities.…After a careful capital budgeting process,…determine the amount of cash that will be needed…for investing activities.…And finally, if financing cash inflows are needed,…compare the relative cost of obtaining cash from borrowing…and cash from owner investment.…
As a general statement,…the interest rate cost of borrowing money…is lower than the cost of giving up ownership…of part of the company in exchange…for a new partner investment…or a new shareholder investment.…The exact decision this year…of whether it's best to obtain financing cash inflow…form borrowing or from owner investment…depends on market conditions this year.…Detailed consideration of these decisions…is part of the field of Finance.…
Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
- Differentiating between net income and operating cash flow
- Categorizing cash flow
- Using financial data to deduce cash flow
- Managing operating, investing, and financing cash flows
- Typical cash flow patterns
- Converting net income into operating cash flow
- Improving operating cash flow
Skill Level Intermediate
1. The Importance of Cash Flow Analysis
2. Overview of the Statement of Cash Flows
3. Using Cash Flow Data to Make a Loan Decision
4. Converting Income Statement Data into Operating Cash Flow Data
5. Managing Cash Flow
6. Cash Flow Numbers for Some Real Companies
The danger of free cash flow3m 56s
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