Additional Cash Received

Chapter 16: Cash is King - Page 16.5

Additional Cash Received

Now take a look back at the illustration on page 16.3 (Sample Case Cash Received). The first two rows in the cash received section are directly related to standard operations. Cash Sales plus Cash from Receivables (sales on credit) equals total Cash from Operations (also known as Total Sales). The following rows are less direct and less readily available from simple assumptions. So we set these aside as "Additional Cash Received."

The third row, "Non Operating (Other) Income," gives you a place to show money received from special operations, such as interest income in a company whose main business isn't making interest. A lot of businesses won't use this one.
The next row shows money received from charging customers sales-related and value-added (VAT) taxes that really belong to the government, and must be paid later. These taxes aren't normally part of a sales forecast, so they don't affect the Income statement, but they do affect cash flow.
The next three rows are where you estimate amounts of money coming into the company as new borrowed money. The difference between each of the three is a matter of type of borrowing and terms.

The row named "New Current Borrowing" (also called short-term debt) is for money you get by borrowing through normal lending institutions, as standard loans, with interest payments.

The row named "New Other Liabilities" is for items like accrued taxes and accrued salaries and wages, money owed that will have to be paid, but isn't formally borrowed. Normally there are no interest expenses associated with this row.

The row named "New Long-term Liabilities" is for new money borrowed on longer terms. This type of borrowing usually requires interest payments.

The sixth and seventh additional cash rows are "Sales of Other Current Assets" and "Sales of Long-term Assets." Selling short-term or long-term assets is another possible way to generate cash.
The last row in cash received, "New Investment Received," is for new money coming into the company as investment.

The result of this section is the sum of cash received. These are amounts received from normal operations (cash sales and cash from receivables), and additional amounts from assumptions outside the normal operations. Now, on the next page, let's look at spending, the other side of the cash equation.

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