Mastering Cash Flows in Business

Company Information

Company/Provider: Culhane Consulting

Email: Send Enquiry / Make A Booking

Telephone: 0217851863

28 Northshore Drive
Lakemichelle, Noordhoek
Cape Town
Western Cape
South Africa

R 2250.00

Course Description

Many people, whether commerce students, bankers or business managers, battle to grasp a full and proper understanding of cash flows. In many cases, the reasons for this lie in the lack of understanding of the accounting of profit, and reconciling this profit with cash flows. To further confuse readers of Financial Statements, the Cash Flow Statement has been changed many times in an attempt to make it more user friendly. Unfortunately, however, unless one has a really good understanding of cash flows, and the difference between profit and cash flow, the Cash Flow Statement remains confusing to most.

Everyone knows the maxim : “CASH IS KING”. If one understands Financial Statements, one can see how true this statement really is. Accounting Profit in no way indicates the ability of a business to repay loans as it is a figure based on numerous book entries and year end adjustments. The Matching Principle in Accounting dictates the profit is NOT income for the year less expenses for the year, but rather income RELATING to the year less expenses RELATING to that income, irrespective when such expenditure was incurred. For this reason, it is impossible to use profit to determine ability to pay debts. Furthermore, the Balance Sheet only shows a picture of the business between transactions. This means that this document changes with EVERY transaction. Thus a large business transacting 10 000 times a day will have a Balance Sheet changing 10 000 times per day! As most Balance Sheets are only viewed 6 months after it has been produced, it is not tangible proof of business strength.

Thus the cash flow is the ONLY tangible evidence of a good and healthy business, and it is therefore ESSENTIAL that anyone in business has a really good understanding of the ability of the business to generate cash flow both historically and in the future.

This programme will look not only at historical cash flows, but also cash flow forecasts as well as forecasting for long term projects. A major part of the programme will examine the ability of the business to generate cash and what steps to take in order to improve this ability.

Having attended this programme, delegates will be able to:

• Fully understand why profit is fundamentally different to cash flow
• Understand how a business generates cash flow from operating, investing and financing activities
• Draw up a Cash Flow Statement using both the Direct and Indirect method, allowing for a full understanding of:
o How to determine cash flows from operations
o Why EBITDA is NOT a good indication of cash flow
o The effect of working capital movements on cash flows
o How to determine the effect of a movement in non-current assets in your cash flow
o Financing activities
o How to determine cash receipts from customers and cash payments to employees and suppliers
o How to draw up a cash flow statement from the Income Statement and Balance Sheet information only
• Analyse the ability of a business to generate cash flow from an understanding of proper working capital management and the source of operating cash flows
• Use correct financial ratios to determine the historical trend of the business in maintaining cash flows through operations
• Understand the difference between liquidity and cash flow and why most analysts fail to grasp these differences
• Take practical corrective action to improve cash flows
• Understand why what happens in theory does not always work in practice
• Understand how to forecast for future cash flows realistically
• Draw up a Cash Flow Forecast from a budget
• Manage the Cash Flow Forecast on a regular basis
• Understand the time value of money and the difficulties in projecting cash flows longer than 12 months
• Understand the concept of Discounted Cash Flows
• Determine the Net Present Value of long term projects using Discounted Cash Flows
• Understand the cash benefits of tax allowances
• Understand the relationship between net present value and the internal rate of return
• Understand the importance of the Weighted Average Cost of Capital (WACC) in business


This programme is usually run in-house at a date suitable to the client


Three to five days depending on the experience of the delegates.


It is advisable for delegates to have some understanding of accounting for this programme.

The price quoted is based on a three day programme per person(Excl VAT). A minimum of 10 delegates is required.


The programme can be run anywhere in South Africa or the African Continent


This programme is run in-house on the premises of the client thus reducing the overall cost to the client

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