cash flow

[Former Member]

Dear BPXperts,

I am newbie to this knowledge domain.

I roughly understand the meaning of Cash flow.

To help me better understand it from a technical perspective, could you kindly explain in some detail, what deducts from what to derive the cash flow? More from how it is derived as an amount.

Would really appreciate your help with points.

Best regards

m.m

Message was edited by:

measure measure

[Former Member]

Hi,

The Cash flow is the cash you have generated out of operations.This is the nett of the income and expenditure of the organization for a period.

To arrive at cash flow,do the following:

1]Net profit + 2] Depreciation 3] Non operative expenses-4] Non operative income [like interest on bank deposits,dividend etc]. decrease in stocks - increase in stocks.

The cash flow is strictly vieved from the opeartions point of view;this is why the non-operative income and expense is omitted.

The depreciation is added back as this is a non-cash expenditure-rather notional.

Increase in stock means expenditure-so reduced and vice versa.

The net balance is the cash flow-rather the cash generated from the operations.

Cash flow is used in liquidity planning.Banks etc use this statement to assess if the buyer can service the debts alongwith the interest.Thus this is a health check instrument.

Hope this helps.

Regards,

Ramesh.

[former_member184494]

measure,

Cash flow is an accounting term not essentially restricted to SAP , you can find a lot more about the same from the accounting parlance.. It essentially talks about the influx and outflow of cash to the business.

Also accounting for the same depends on the regulations like GAAP etc which are region specific.

What exactly do you require ?

cash flow as it is modelled in SAP FI ?

Cash flow as a concept ?

A basic definition of the same :

http://www.investorwords.com/768/cash_flow.html

Arun

Message was edited by:

Arun Varadarajan