Rationale, mathematical models and forecasting laboratory. I calculate cash flow

A study of a key financial performance indicator – cash flow. Developing new cash flow calculation algorithms, economic sense and problem analysis. Conducting scientific experiments and developing behavioural techniques to generate regular positive cash flow.

• About cash flow
• Generation of recurring positive cash flow
• The latest cash flow algorithms
• Family budget planning in the context of inflation
• Family budget planning applications
• How not to spend all your money during discounts and promotions

About Cash Flow

Cash flow is a concept used in financial analysis and financial management to assess the cash flow within a company, project or investment over a period of time.

It measures the amount of money flowing in and out of a particular business or project and helps to assess its financial health, solvency and ability to generate profits.

Cash flow has three main components:

1. Cash receipts (positive cash flow). This is money flowing into the company or project, such as from selling goods or services, receiving dividends, borrowing, or investing.

2. Cash expenditures (negative cash flow). This is money that the company spends on various operations (purchasing inventory, issuing payroll, rent, taxes, etc.).

3- Change in cash balances. This is the difference between cash receipts and cash expenditures over a period of time. A negative change means that cash has decreased, while a positive change indicates an increase in cash.

Cash flow is important for assessing the financial strength and profitability of a business, as well as for making investment and financing decisions.

Having a positive cash flow is usually considered a positive sign, indicating that the company is able to cover its current expenses and invest in growth. Negative cash flow can indicate financial problems, as well as a lack of funds to support normal operations.

Generating regular positive cash flow

Generating regular positive cash flow is important for many people and businesses.

Let’s look at a few practical approaches:

– Budgeting and financial planning. Develop a detailed budget and financial plan so you clearly understand where your income comes from and what your money is spent on. This will help you optimise spending, reduce costs and maximise income.

– Diversity of income sources. Try to have multiple sources of income so you don’t have to depend on a single source. You may have: salary, rent payments, dividends, business profits, investment income, etc.

– Investing. Consider investing in a variety of assets that can generate stable income (dividend stocks, bonds, rental properties and other financial instruments).

– Business and Entrepreneurship. If you have entrepreneurial skills, consider starting your own business. A successful business can be a source of steady cash flow.

– Passive income. Try to create passive income sources that bring in money with minimal involvement from you. For example, it could be creating a digital product, writing a book, creating online courses, etc.

– Reduce debts and interest. Seek to reduce debts and high interest on loans to free up extra money to invest or save.

– Savings and an emergency fund. Build an emergency fund for unexpected situations and financial crises. This will help you avoid gaps in your cash flow.

– Develop and improve your skills. Invest in education and development to increase your value in the job market or in business.

Remember, generating regular positive cash flow is a process that requires patience, planning and informed decision making. Start small, gradually improve your financial habits and strive to achieve your goals.

The latest cash flow algorithms

The latest cash flow algorithms will help you optimise your financial performance.

Cash flows are one of the most important indicators of business performance. They reflect a company’s actual ability to generate and utilise cash. However, calculating cash flows can be complex, requiring a lot of data and analytical skills.

We would like to introduce you to several algorithms that can simplify this process and improve its accuracy:

– The method of direct calculation of cash flows from operating activities. This method is based on the fact that cash flows from operating activities are equal to the sum of receipts from customers for goods or services sold, minus the sum of payments to suppliers for purchased materials and services, and minus the sum of payments to employees for work performed. This method requires detailed information on each transaction related to operating activities and can be labour-intensive. However, it provides the most accurate picture of cash flows from operating activities. It is not subject to adjustments related to accounting policies and methods.

– Indirect method of calculating cash flows from operating activities. This method is based on the fact that cash flows from operating activities are equal to earnings before interest and taxes, plus or minus adjustments related to non-cash items of income and expense (depreciation, amortisation, write-off of bad debts, inventory changes, etc.), and plus or minus adjustments related to changes in current assets and liabilities (accounts receivable and accounts payable, prepayments and provisional receipts, etc.). This method requires information about the company’s profit and loss, its balance sheet, and knowledge of which items affect cash flow. This method may be less accurate than the direct method because it depends on the company’s accounting policies and methods, but it may be easier to apply.

– Free Cash Flow Method. This method is based on the fact that free cash flow equals cash flow from operating activities minus cash flow from investing activities. Cash flow from investing activities is the sum of receipts and payments related to the acquisition, sale of long-term assets. Free cash flow shows how much cash a company can use to finance its growth, pay dividends, and repay debts. This method requires information on cash flows from operating and investing activities.

Family budget planning in the context of inflation

Planning a family budget in an inflationary environment requires special attention.

– Keep track of expenses. It is important to keep track of all family expenses. Use budget tools, apps or spreadsheets to record all expenses, even minor ones. This will help you better understand where your money is going.

– Evaluate inflationary impacts. Determine what goods and services are subject to inflation in your area. This could be food, utilities, transport and other categories. Keep an eye on the news to see which sectors of the economy are experiencing price increases.

– Create a reserve for unexpected expenses. Include a contingency fund in your budget structure for unexpected expenses.

– Update your budget regularly. Review your budget regularly to adapt to changes in prices.

– Consider investing. Invest in securities, property or other assets to preserve and grow your money in the face of inflation.

– Keep an eye out for discounts and promotions. Keep an eye out for offers, promotions and discounts to save money on your purchases.

– Learn the basics of financial literacy. Learn the basics of personal finance to effectively manage money in the face of inflation.

Plan your family budget well so that you don’t feel inflation acutely.

Family budget planning applications

There are many programmes and apps for family budget planning.

– YNAB (You Need A Budget) is a popular budgeting app that users use to assign a specific purpose to each dollar, keeping track of where the money goes.

– Mint is a free app that automatically collects information about your finances and provides an overview of your budget and investments.

– PocketGuard. Automatically syncs with your bank accounts and credit cards, provides a clear overview of your finances and remaining budget.

– GoodBudget. This app helps you divide your money into different categories.

– Wally. Helps you keep track of your expenses, captures receipts.

– Expense IQ. This app provides extensive functionality for tracking finances.

– Expensify. Helps you track business expenses, family expenses.

How not to spend all your money during discounts and promotions

During discounts and promotions, it is important to manage your money properly. Buy only the items you need and aim to keep your budget intact.

– Make a budget. Make a budget so that you clearly know how much you can spend on your purchases.

– Plan your purchases. Make a list of items you need and stick to it. This will help you avoid impulse purchases.

– Postpone your purchase. If you find something attractive, don’t buy it immediately, but give yourself some time (e.g. 24 hours) to think about it.

– Compare prices. Compare prices at different shops. Promotions can be unfavourable.

– Pay attention to quality. Be sure to pay attention to the quality of the goods offered.