How much money is flowing in and out of businesses, money trends and how to prepare for an enterprise’s financial stability. While going through the process of optimizing cash-flow management, here are the 4 key components to keep in mind:
- Measuring the profit. You have to include depreciation, accrual accounting concepts and other non-cash items, while Cash Flow only takes into account cash or cash-like income and costs.
- Current assets and liabilities are due within one year therefore, current liabilities should preferably be lower than current assets.
- Operational expenses. The cash flow should be sufficient to cover operational expenses. When running a negative cash flow, you will have to sell assets, lower your cash position or find additional financing options.
- Ratio Analysis is often used by investors to assess companies’ financial situation. A well-maintained profit and loss statement, cash flow statement and balance sheet will enable yourself and investors to calculate these ratios.
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Training: The session on “Optimizing Cash Flow Management” was run during the Leveraging Innovative Finance Together event, organized for sustainable energy, water, and sanitation social entrepreneurs
Trainer: Mo Hom Noon – Business and Financial analyst – One to Watch
Date: 26 February 2019
Location: Yangon, Myanmar