Precision Machines Case Study Tutorial Step-by-Step – Part 3

Part 3: Calculating Cash Flows

Now its time for the hard part – calculating the cash flows for for precision machines. We can do this in four distinct steps, which are best outlined in the pictures below.

 
  • Student: Martin Gibson
  • Textbook: Capital Budgeting
  • Course: FIN 370
 
Find the net cash flow by subtracting disbursements from collections

Find the net cash flow by subtracting disbursements from collections

Cumulative cash flow is calculated by taking the net from the current month, then adding the cash flow from the previous month.

Cumulative cash flow is calculated by taking the net from the current month, then adding the cash flow from the previous month. Do the same exact thing for minimum cash balance,  just use the following row as the basis for the formula. 

Use Minimum Cash Balance from the top of the spread sheet to find the surplus or deficit for each month.

Use Minimum Cash Balance from the top of the spread sheet to find the surplus or deficit for each month.

Precision Machines Step-by-Step

Check out our three part series on precision machines. 

 

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