(3.1) Learning Goals

Module Goals

After completing Module 3 you will be able to:

1. Explain the purpose of the cash flow statement (CFS)
2. Introduce the components of cash flow statement worksheet
3. Introduce the flow of cash through a business: cash flow cycle diagram
4. Show the relationship between the income statement (P&L) and cash flow statement (CFS)
5. Explain how to forecast cash flow projections
6. Illustrate how a 20% sales increase has a positive impact on the cash flow budget
7. Illustrate how a 20% sales decrease reflects a negative value on the cash flow ending balance
8. Differentiate between the balance sheet, income statement, and cash flow statement
9. Explain how to manage working capital by monitoring balance sheet’s three accounts
10. Explain how the business owner uses the line of credit in relationship to cash flow statement
11. Explain a banker’s lending criteria when reviewing cash flow budgets
12. Explain how to manage working capital to maintain a positive cash flow
13. Explain why the bank loan officer has a fiduciary responsibility to bank depositors
14. Explain why FICO scores alone will not guarantee a small business line of credit
15. Identify two types of insolvency: Cash flow insolvency & Balance sheet insolvency
16. Explain how to calculate the break-even point
17. Explain how to calculate fixed and variable costs
18. Explain how gross margins impacts profitability