CF: CASH FLOW ANALYSIS

DATA ENTRY:

DIFFERENCE BETWEEN THE EFFECT OF ENTERING NUMBERS AND FORMULAS

There are basically three methods of entering data into CF:

  1. Entering a Number,
  2. Itemization, and
  3. Entering a Formula.

Entering a Number.

When you enter a number (amount) into a CF data screen, that number only pertains to the particular month in the particular year where it is entered.

Using Itemization.

Using itemization simply allows you to calculate a number (on a separate itemization screen), and the figure which appears on the data entry screen (as a result of your itemization) only pertains to that particular month in the year where it is entered.

Entering a Formula.

If you enter a formula in CF, but you indicate that you do not want to use that formula for the remaining months, then the calculated number (as a result of the formula) only pertains to that particular month in the particular year where it is entered.
If you enter a formula in CF, and you indicate that you do want to use that formula for the remaining months, then the formula will "carry down" for each month through-out the following years until it is replaced by another formula. Since, you are usually preparing your CF model so as to make a projection over a number of years (and as it would be very cumbersome to enter each "number" over 60 months), using formulas will help you to make sure numbers which should apply for the entire 5-year plan are properly entered, without having to do so manually.
Incrementing by Zero:
Multiplying by 100:

The Difference Between Projections and Forecasts.

In utilizing CF, you must consider the two fundamental alternatives available in the creation of your cash flow model.

In doing a budget that is in the nature of a forecast, the assumptions are "expected" to occur; on the other hand projecting growth is in the nature of a projection since the anticipated amount of growth is speculated and the anticipated amount of costs associated with the growth are projected upon the assumption of a particular cost or relationship with sales that may or may not be true. you do want to use that formula for the remaining months, then the formula will "carry down" for each month through-out the following years until it is replaced by another formula. Since, you are usually preparing your CF model so as to make a projection over a number of years (and as it would be very cumbersome to enter each "number" over 60 months), using formulas will help you to make sure numbers which should apply for the entire 5-year plan are properly entered, without having to do so manually.

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