Cash Flow Statement Forecast Advanced

Overview This advanced exercise focuses on constructing a single-year Cash Flow Statement by deeply linking the Income Statement and Balance Sheet. You will calculate cash flows from operating, investing, and financing activities, then reconcile the resulting change in cash back to the Balance Sheet to arrive at the ending cash balance. The emphasis is on understanding how detailed balance sheet movements—especially working capital and long-term asset changes—translate into actual cash generation and usage. Learning Goals Build Cash Flow from Operating Activities (CFO) starting from net income and adjusting for non-cash items and changes in working capital. Calculate Cash Flow from Investing Activities (CFI) by analyzing changes in long-term assets such as property, plant & equipment and long-term investments. Determine Cash Flow from Financing Activities (CFF) using changes in debt, equity issuance, and dividend payments. Reconcile total cash flows to the Balance Sheet by computing the Ending Cash Balance for 2021. Verify that the Balance Sheet balances after incorporating the projected cash flows. Key Concepts Operating Activities: Cash flows generated from core business operations, adjusted for non-cash items and working capital changes. Investing Activities: Cash flows related to capital expenditures and investments in long-term assets. Financing Activities: Cash flows from debt issuance or repayment, equity issuance, and dividend distributions. Changes in Working Capital: Movements in current assets and liabilities that explain differences between accounting profit and cash flow. Net Income: The starting point for cash flow from operations under the indirect method. Retained Earnings: The cumulative portion of net income retained in the business, linking the income statement to stockholders’ equity. Stockholders’ Equity: The residual interest in the company’s assets after liabilities, ensuring the balance sheet remains balanced.

Practice Cash Flow Statement Forecast Advanced with interactive Excel modeling exercises in our Financial Statement Modeling module.

This hands-on modeling exercise helps you master Cash Flow Statement Forecast Advanced through real-world Excel practice and financial modeling techniques.