Demonstrating Managerial Decisions on Profitability and Cash Flow
Explore how managerial decisions impact profitability and cash flow in credit, asset acquisition, capital injection, drawings, margins, and borrowing. Dive into scenario analysis comparing income statement and cash flow projections, considering different factors affecting financial outcomes. Get insights on optimizing financial strategies to drive business success.
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Presentation Transcript
Module 2: Session 6 Scenario analysis Module 2: Session 6 1 4/8/2025
Session Objectives Demonstrating the effect of managerial decisions on profitability and cash flow in areas of credit, asset acquisition, capital injection, drawings, margins and borrowing. This session is best done using computers (or word schedules provided). Module 2: Session 6 2 4/8/2025
Scenario Analysis (all) 1.Comparison of Income Statement and Cash Flow Projections. 2. If the price limit of shs. 450m/kms did not apply 3. Taking no drawings per month. 4. Certified work paid for after two months instead of one. 5. Deferring the land purchase and hiring all the equipment instead of buying it (assume additional rental per month of shs. 6m). Module 2: Session 6 3 4/8/2025
Scenario Analysis continued 6. Buying materials and fuel and hiring equipment on credit of one month. 7. Deferring purchase of land and equipment and hiring it at an extra 6m per month, taking no drawings and purchasing material and fuel at 30 days credit. 8. A 20% margin on cost without the price limit of shs 450m, certification done monthly and paid for after 30 days, deferring purchase of land and equipment and hiring it at an extra 6m per month, taking no drawings and purchasing material and fuel at 30 days credit. Module 2: Session 6 4 4/8/2025
THE END Q&A Module 2: Session 6 5 4/8/2025
