From the course: Financial Modeling and Forecasting Financial Statements
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How to deduce cash flows
From the course: Financial Modeling and Forecasting Financial Statements
How to deduce cash flows
- Before we get to our consideration of Home Depot, let's see how we can use forecasted balance sheet and forecasted income statement data to deduce the associated forecasted cash flow data. I have a friend who's been a loan officer at a bank for many years. He tells me that the first thing he has his staff do when a small to medium size business comes in for a loan is to use the company's balance sheet and income statement to create a statement of cash flows. So let's learn how to do this. This skill is useful in and of itself, but this is also a useful exercise in that we learn how all three financial statements relate to one another. By the way, if after this quick overview, you feel a little shaky with your cash flow computations, feel free to work through the cash flow analysis course that my brother Jim and I have created for the LinkedIn Learning library. Here are simple income statement data for EV Company. Sales:…
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