CASH FLOW

STATEMENT
FORECAST
STEP-BY-STEP GUIDE

9 steps simplified

BY BOJAN RADOJICIC

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STEP 1:

Build forecast of the

income statement

INCOME STATEMENT
INCOME STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5 Driver / Link Applied value

Electronic devices 5.000 5.500 6.160 6.899 7.727 8.654 9.693 Est imated growt h rat e 12,0%

Software 3.000 3.300 3.597 3.921 4.274 4.658 5.077 Est imated growt h rat e 9,0%

Services and support 2.000 2.200 2.486 2.809 3.174 3.587 4.053 Est imated growt h rat e 13,0%
Total revenues 10.000 11.000 12.243 13.629 15.175 16.900 18.824

COGS 6.200 6.800 7.468 8.314 9.257 10.309 11.482 Revenue - Gross profit

Gross profit 3.800 4.200 4.775 5.315 5.918 6.591 7.341 Gross margin 39,0%

Wages and personal expenses 750 830 857 954 1.062 1.183 1.318 Percentage of Revenue 7,0%

Sales and marketing 610 630 735 818 911 1.014 1.129 Percentage of Revenue 6,0%

Rent 250 260 270 281 292 304 316 Est imated growt h rat e 4,0%

Maintenance and repairs 190 210 245 273 304 338 376 Percentage of Revenue 2,0%

Office supplies and utilities 140 150 159 169 179 189 201 Est imated growt h rat e 6,0%

Operating expenes 2.250 2.430 2.680 2.955 3.261 3.600 3.977

Operating profit 1.550 1.770 2.095 2.360 2.658 2.991 3.364

Interest expenses 50 60 69 76 85 95 105 Percentage of total debt 8,0%

Other financial income or expensess, net 10 11 12 14 15 17 19 Percentage of Revenue 0,1%

Incom e before tax 1.490 1.699 2.014 2.270 2.558 2.879 3.240

Income tax 300 309 322 363 409 461 518 Ef fective tax rate 16,0%

Net inocme 1.190 1.390 1.692 1.907 2.148 2.419 2.721

First, you need to have income statement projection. Draft your IS layout.
Determine drivers for forecasting for each line of revenues and expenses

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STEP 2:

Build forecast of the

balance sheet

BALANCE SHEET

BALANCE SHEET Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Cash 175 1.310 2.464 4.084 5.869 7.921 10.232 Link to CF statement
Account Receivables 450 500 604 672 790 880 980 NWC Schedule
Inventories 300 450 491 547 609 678 755 NWC Schedule
Current assets 925 2.260 3.559 5.303 7.267 9.479 11.967

Property, pland and equipment 500 750 1.020 1.136 1.265 1.408 1.569 CAPEX Schedule
Non-cur rent assets 500 750 1.020 1.136 1.265 1.408 1.569

Total assets 1.425 3.010 4.579 6.439 8.532 10.887 13.535

Trade Payables 225 500 409 456 507 565 629 NWC Schedule
Short term debt 200 200 245 273 304 338 376 Debt Schedule
Current liabilities 425 700 654 728 811 903 1.006

Long term debt 500 520 612 681 759 845 941 Debt Schedule
Long term liabilities 500 520 612 681 759 845 941

Common stock and other capital 200 200 200 200 200 200 200
Retained earnings 300 1.590 3.113 4.829 6.763 8.939 11.389
Equity 500 1.790 3.313 5.029 6.963 9.139 11.589

Total Equity and liabilities 1.425 3.010 4.579 6.439 8.532 10.887 13.535

As we need cash flow forecast, leave cash position as blank!!!!!

First, you need to make a schedules for working capital, CAPEX and Debt.
After you create that, transfer the balances to the balance sheet!
Don’t forget to establish a check row to see if you assets is equal to the equity and
liabilities.

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 STEP 3:

Draft Cash Flow

Statement

CASH FLOW STATEMENT - BLANK

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

?
Net income 1.190 1.390

Depreciation and amortization 110 130

(Incerease) or decrease in account receivables - 260 - 50
(Incerease) or decrease in inventories - 315 - 150
Increase (decrease) in trade payables 150 275
CF from operating activities 875 1.595

Acquisition of property, plant and equipment - 450 - 380

CF from investing activities - 450 - 380

Increase (decrease) in financial liabilities 100 20

Dividends paid - 400 - 100
CF from financing activities - 300 - 80

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Create a lines of your cash flow statement.

Input historical data

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 STEP 4:

Transfer net income

CASH FLOW STATEMENT - BLANK

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130

(Incerease) or decrease in account receivables - 260 - 50
(Incerease) or decrease in inventories - 315 - 150
Increase (decrease) in trade payables 150 275
CF from operating activities 875 1.595

Acquisition of property, plant and equipment - 450 - 380

CF from investing activities - 450 - 380

Increase (decrease) in financial liabilities 100 20

Dividends paid - 400 - 100
CF from financing activities - 300 - 80

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Transfer projected net income from the income statement

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 STEP 5:

Transfer depreciation and

amortization

CASH FLOW STATEMENT

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130 145 161 179 200 222
(Incerease) or decrease in account receivables - 260 - 50
(Incerease) or decrease in inventories - 315 - 150
Increase (decrease) in trade payables 150 275
CF from operating activities 875 1.595

Acquisition of property, plant and equipment - 450 - 380

CF from investing activities - 450 - 380

Increase (decrease) in financial liabilities 100 20

Dividends paid - 400 - 100
CF from financing activities - 300 - 80

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Transfer projected depreciation and amortization form the CAPEX schedule or from
income statement
IF you have some other non-cash expenses like impairments of assets, list them also
here as added back items.

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STEP 6:

Import changes in current

assets and liabilities

CASH FLOW STATEMENT

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130 145 161 179 200 222
(Incerease) or decrease in account receivables - 260 - 50 - 104 - 68 - 118 - 90 - 100
(Incerease) or decrease in inventories - 315 - 150 - 41 - 56 - 62 - 69 - 77
Increase (decrease) in trade payables 150 275 - 91 46 52 58 64
CF from operating activities 875 1.595 1.601 1.991 2.200 2.517 2.831

Acquisition of property, plant and equipment - 450 - 380

CF from investing activities - 450 - 380

Increase (decrease) in financial liabilities 100 20

Dividends paid - 400 - 100
CF from financing activities - 300 - 80

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Transfer projected net net working capital items. Any change of current assets and
liabilities affect cash flow.
Calculate Cash flow from operating activities.

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STEP 7:

Import investing cash

flows

CASH FLOW STATEMENT

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130 145 161 179 200 222
(Incerease) or decrease in account receivables - 260 - 50 - 104 - 68 - 118 - 90 - 100
(Incerease) or decrease in inventories - 315 - 150 - 41 - 56 - 62 - 69 - 77
Increase (decrease) in trade payables 150 275 - 91 46 52 58 64
CF from operating activities 875 1.595 1.601 1.991 2.200 2.517 2.831

Acquisition of property, plant and equipment - 450 - 380 - 415 - 277 - 308 - 343 - 383
CF from investing activities - 450 - 380 - 415 - 277 - 308 - 343 - 383

Increase (decrease) in financial liabilities 100 20

Dividends paid - 400 - 100
CF from financing activities - 300 - 80

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Go to capex schedule and transfer the net amount of acquisition of property, plant,
equipment and intangibles.

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STEP 8:

Import financing cash

flows

CASH FLOW STATEMENT

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130 145 161 179 200 222
(Incerease) or decrease in account receivables - 260 - 50 - 104 - 68 - 118 - 90 - 100
(Incerease) or decrease in inventories - 315 - 150 - 41 - 56 - 62 - 69 - 77
Increase (decrease) in trade payables 150 275 - 91 46 52 58 64
CF from operating activities 875 1.595 1.601 1.991 2.200 2.517 2.831

Acquisition of property, plant and equipment - 450 - 380 - 415 - 277 - 308 - 343 - 383
CF from investing activities - 450 - 380 - 415 - 277 - 308 - 343 - 383

Increase (decrease) in financial liabilities 100 20 137 97 108 121 135

Dividends paid - 400 - 100 - 169 - 191 - 215 - 242 - 272
CF from financing activities - 300 - 80 - 32 - 94 - 107 - 121 - 137

Total cash flow 125 1.135

Cash at the beginning of period 50 175

Cash at the end of period 175 1.310

Go to debt schedule and transfer the amounts of change in financial liabilities and
dividends to be paid out.

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STEP 9:

Sum up

CASH FLOW STATEMENT

CASH FLOW STATEMENT Last year Actual Year 1 Year 2 Year 3 Year 4 Year 5

Net income 1.190 1.390 1.692 1.907 2.148 2.419 2.721

Depreciation and amortization 110 130 145 161 179 200 222
(Incerease) or decrease in account receivables - 260 - 50 - 104 - 68 - 118 - 90 - 100
(Incerease) or decrease in inventories - 315 - 150 - 41 - 56 - 62 - 69 - 77
Increase (decrease) in trade payables 150 275 - 91 46 52 58 64
CF from operating activities 875 1.595 1.601 1.991 2.200 2.517 2.831

Acquisition of property, plant and equipment - 450 - 380 - 415 - 277 - 308 - 343 - 383
CF from investing activities - 450 - 380 - 415 - 277 - 308 - 343 - 383

Increase (decrease) in financial liabilities 100 20 137 97 108 121 135

Dividends paid - 400 - 100 - 169 - 191 - 215 - 242 - 272
CF from financing activities - 300 - 80 - 32 - 94 - 107 - 121 - 137

Total cash flow 125 1.135 1.154 1.620 1.785 2.052 2.311
Cash at the beginning of period 50 175 1.310 2.464 4.084 5.869 7.921

Cash at the end of period 175 1.310 2.464 4.084 5.869 7.921 10.232

Calculate total cash flow in separate row

Add cash at the beginning period as ended cash from previous period
Calculate final cash position
When do this, transfer the cash to the balance sheet.

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