Discounted Cash Flow Valuation Calculator

The free cash flow valuation calculator can be used to value the operations of a startup up business. The calculator uses the free cash flow generated by the business and discounts this at its weighted average cost of capital.

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Capital Expenditure Model in Financial Projections

Capital expenditure is a necessary part of operating a business and is included in the cash flow statement of the financial projections template. This capex model allows those costs to be estimated in detail and summarized.

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Estimate New Capital

New equity capital is included in the cash flow statement of the projection as a positive figure as it represents cash flowing into the business from investors. For example, if in year two the plan inject new capital of 5,000 to finance the purchase of new machinery, the figure of 5,000 should be included in the cash flow statement on the proceeds from the issue of new share capital line.

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Cash Flow vs Profit

A business needs to understand that there is a difference between profit and cash. Eventually a business needs to be able to make a profit, however, providing it is properly financed and has adequate cash flow a business can survive for a considerable period of time without profits.

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Cash Conversion Cycle Calculator

The cash conversion cycle calculator works out the number of days in the cash cycle of a business. It estimates the level of inventory, accounts receivable, and accounts payable needed for a given level of trading operations and determines the funding required to finance working capital.

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Cash Conversion Cycle

All businesses have a cash conversion cycle, it is the time in days between paying for inventory and receiving the cash from the sale of that inventory from customers. The cash conversion cycle formula can be used to calculate the number of days.

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Cost of Trade Credit

When early payment discounts are offered by suppliers, the cost of trade credit needs careful consideration as the effective interest rate can be very high compared to other forms of finance.

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Cost of Offering Early Payment Discount

The cost of offering early payment discount to customers needs careful consideration by a startup business as the effective annual rate is normally very high compared to other sources of finance.

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Free Cash Flow

Free cash flow is the cash flow available after the business has paid for all of its operating needs including providing working capital, and invested in property, plant, and equipment (capital expenditure) necessary to maintain its current growth rate.

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Inventory Purchases Budget

The inventory purchases budget shows a business how much inventory it needs to purchase each period to maintain the required inventory levels and ensure the availability of products in appropriate quantities and costs to meet anticipated demand.

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16 Things To Know About Creating Financial Projections

Financial projections are made up from three financial statements, the balance sheet, the income statement, and the cash flow statement. Here are sixteen things to know about creating financial projections which should give you a better understanding of what’s included in the three financial statements, and how they relate to each other.

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Cash vs Accrual Accounting in Financial Projections

It is important to consider both the cash basis and accrual basis of accounting when preparing financial projections.

Cash basis accounting records revenue and expenses when cash enters and leaves the business, and the accrual basis of accounting records revenue when earned and expenses when the benefit of them is received.

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