General Overview

This template provides detailed projection of a company's cash flow using 3 different methods; Indirect, Direct & Free Cash Flow to Firm.
Assessing the amounts, timing, and uncertainty of cash flows, along with where they originate and where they go, is one of the most important objectives of financial reporting. It is essential for assessing a company's liquidity, flexibility, and overall financial performance. Positive cash flow indicates that a company's liquid assets are increasing, enabling it to cover obligations reinvest in its business, return money to shareholders, pay expenses, and provide a buffer against future financial challenges.

Cash Flow Methods used in the template:

? Indirect Method
Most popular method due to its simplicity since most companies keep their records on an accrual basis.
Under the indirect method, the cash flow statement begins with net income on an accrual basis and subsequently adds and subtracts non-cash items to reconcile to actual cash flows from operations.

? Direct Method
The second accounting treatment used to generate a cash flow statement.
Although it's time-consuming, some companies use the direct method as it offers more detail and a clearer picture of operating cash flow accounts of a business. The direct cash flow method measures only the cash that's been received, which is typically from customers and the cash payments or outflows, such as to suppliers. The inflows and outflows are netted to arrive at the cash flow.
*The investing and financing sections of the statement of cash flows are prepared in the same way for both the indirect and direct methods.

? Free Cash Flow to Firm Method
Free cash flow to the firm (FCFF) represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments. FCFF is a measurement of a company's profitability after all expenses and reinvestments. It is one of the many benchmarks used to compare and analyze a firm's financial health.

General Notes

? Throughout the entire model formulas are in black, hard coded numbers in blue and links from other worksheets in green.
? User needs to fill in all the input cells (marked as blue font) for the template to function properly.
? As a general rule, try to avoid changing worksheet names and formulas. Please contact us if you need assistance on the functionality of the template

Help & Support

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