CASH FLOW AUDRA GAIZIUNAS - MARIA PEARMAN, CPA MARIA PEARMAN, - - PowerPoint PPT Presentation

MASTERING CASH FLOW

AUDRA GAIZIUNAS - MARIA PEARMAN, CPA

MARIA PEARMAN, CPA Author, Small Brewery Finance

PERKINS & CO, PC

AUDRA GAIZIUNAS

FRACTIONAL CEO, CFO

BREWED FOR HER LEDGER, LLC BA FINANCE COMMITTEE BHRAMARI BREWING COMPANY

AGENDA

• Cash Flow Statement Overview
• Cash Flow in Detail
• Building a Forecast
• Q+A

• Cash Flow Statement

Purpose: Bridges the Balance Sheet and Income Statement Components:

• Operating Activities
• Investing Activities
• Financing Activities
• LIQUIDITY RATIOS
• EFFICIENCY RATIOS
• CONSIDER ADDING DAYS (OR

MONTHS) OF CASH ON HAND TO THE BOTTOM OF YOUR CASH FLOW

HOW DO WE MONITOR THE HEALTH OF OUR CASH POSITION?

CASH FLOW RULES

Cash income -> Cash inflow Cash loss -> Cash outflow Asset increase -> Cash outflow Asset decrease -> Cash inflow Liability increase -> Cash inflow Liability decrease -> Cash outflow Equity increase -> Cash inflow Equity decrease -> Cash outflow

Operating Activities (Generally short term area

• f focus)

Investing and Financing Activities (Generally long term area of focus)

Month 1 Net Cash Generated By Operating Activities 133,000 Cash Flow from Investing Activities Purchase of Property & Equipment (72,000) Sale of Property & Equipment 6,000 Purchase of Land Net Cash From Investing Activities (66,000) Cash Flow from Financing Activities Line of Credit Borrowing Payment of Dividends Long Term Liability Repay (Principal) (4,830) Net Cash From Financing Activities (4,830) NET CASH FLOW 62,170 Beginning Cash 176,453 Ending Cash 238,623

Months of Cash 5

ACTIVITIES THAT IMPACT EACH SECTION

• BEFORE/AFTER

REVIEW

ABC Brewing Cash Flow Statement For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Cash Flow From Operations Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771) Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477 Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069 (Increases)/Decreases in Accounts Receivable (Additions)/Depletions of Inventory Increases/(Decreases) in Accounts Payable Net Cash From Operating Activities (12,793) (12,185) (11,695) (12,185) (12,185) (10,225) Cash Flow from Investing Activities Purchase of Property & Equipment Sale of Property & Equipment Deposits on Kegs Net Cash From Investing Activities Cash Flow from Financing Activities Line of Credit Borrowing Dividends New Current Borrowing - Additional Loan or Equity Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) NET CASH FLOW (17,623) (17,035) (16,565) (17,076) (17,096) (15,157) Beginning Cash 37,645 20,022 2,987 (13,578) (30,654) (47,750) Ending Cash 20,022 2,987 (13,578) (30,654) (47,750) (62,907)

Months of Cash

• 1
• 1
• 1

ABC Brewing Cash Flow Statement For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Cash Flow From Operations Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771) Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477 Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069 (Increases)/Decreases in Accounts Receivable 24,100 500 2,200 (Additions)/Depletions of Inventory Increases/(Decreases) in Accounts Payable 11,650 22,300 Net Cash From Operating Activities (1,143) 34,215 (11,195) (9,985) (12,185) (10,225) Cash Flow from Investing Activities Purchase of Property & Equipment Sale of Property & Equipment Deposits on Kegs Net Cash From Investing Activities Cash Flow from Financing Activities Line of Credit Borrowing Dividends New Current Borrowing - Additional Loan or Equity Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) NET CASH FLOW (5,973) 29,365 (16,065) (14,876) (17,096) (15,157) Beginning Cash 37,645 31,672 61,037 44,972 30,096 13,000 Ending Cash 31,672 61,037 44,972 30,096 13,000 (2,157)

Months of Cash 1 1 1 1

Actions taken with Accounts Receivable and Accounts Payable

ABC Brewing Cash Flow Statement For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Cash Flow From Operations Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771) Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477 Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069 (Increases)/Decreases in Accounts Receivable 24,100 500 2,200 (Additions)/Depletions of Inventory 5,200 4,400 1,600 600 Increases/(Decreases) in Accounts Payable 11,650 22,300 Net Cash From Operating Activities 4,057 38,615 (9,595) (9,985) (12,185) (9,625) Cash Flow from Investing Activities Purchase of Property & Equipment Sale of Property & Equipment Deposits on Kegs Net Cash From Investing Activities Cash Flow from Financing Activities Line of Credit Borrowing Dividends New Current Borrowing - Additional Loan or Equity Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931) NET CASH FLOW (773) 33,765 (14,465) (14,876) (17,096) (14,557) Beginning Cash 37,645 36,872 70,637 56,172 41,296 24,200 Ending Cash 36,872 70,637 56,172 41,296 24,200 9,643

Months of Cash 1 2 1 1 1

Actions taken with Inventory

LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable (A/P) 262,591.35 Total Accounts Payable $ 262,591.35 Credit Cards Capital One 11,238.99 Total Credit Cards $ 11,238.99 Other Current Liabilities Keg Deposits 6,876.00 Sales and Use Tax Payable 9,082.13 Total Other Current Liabilities $ 15,958.13 Total Current Liabilities $ 289,788.47 Long-Term Liabilities Note Payable 435,300.00 Total Notes Payable $ 435,300.00 Total Long-Term Liabilities $ 435,300.00 Total Liabilities $ 725,088.47 Equity Member's Equity Total Member's Equity $ 154,731.39 Retained Earnings 470,278.41 Net Income 37,190.87 Total Equity $ 662,200.67 TOTAL LIABILITIES AND EQUITY $ 1,387,289.14 Total

ASSETS Current Assets Checking 41,669.69 MM Savings 18,256.08 Paypal 549.58 Total Bank Accounts $ 60,475.35 Accounts Receivable Accounts Receivable (A/R) 47,713.76 Total Accounts Receivable $ 47,713.76 Other Current Assets Employee Cash Advances 1,728.00 Inventory- Finished Goods Inventory- Finished Goods- Kegged 13,142.82 Inventory- Finished Goods- Packaged (Case/Bottle) 10,290.27 Total Inventory- Finished Goods $ 23,433.09 Inventory- Merchandise 10,314.16 Inventory- Packaging 56,465.81 Inventory- Raw Materials 71,409.50 Inventory- WIP 9,859.11 Prepaid Insurance 10,958.55 Prepaid Hop Contract 58,360.13 Undeposited Funds 3,028.21 Total Other Current Assets $ 353,745.67 Total Current Assets $ 461,934.78 Fixed Assets Accumulated Amortization

• 17,273.64

Accumulated Depreciation

• 180,822.23

Furniture & Fixtures 42,455.76 Leasehold Improvements 342,101.32 Organizational Cost 29,203.82 Production Equipment 311,283.34 Restaurant Equipment 139,586.69 Startup Costs 152,576.11 Vehicles 96,928.31 Total Fixed Assets $ 916,039.48 Other Assets Security Deposits 7,300.00 Total Other Assets $ 7,300.00 TOTAL ASSETS $ 1,385,274.26

ABC Brewing Balance Sheet

As of April 30, 2020

Review the Balance Sheet Regularly!

SHORT TERM ACTIVITIES LEAD TO LONG TERM DECISIONS

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Flow From Operations Net Income $12,106 $14,462 $15,959 $15,477 $14,486 $12,418 $13,356 $13,364 $12,539 $12,548 $13,389 $5,398 Depreciation & Amortization $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 Interest Expense $7,121 $7,113 $7,105 $7,097 $7,089 $7,081 $7,073 $7,064 $7,056 $7,048 $7,039 $7,031 (Additions)/Depletions of Inventory $0 $0 $3,412 $1,444 $306 $414 $2,022 $0 $514 $0 $0 $1,743 Net Cash From Operating Activities $24,226 $26,573 $24,650 $26,128 $26,879 $24,911 $23,405 $25,427 $24,080 $24,594 $25,427 $15,684 Cash Flow from Investing Activities Purchase of Property & Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885 Purchase of Distribution Vehicles $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Deposits on Kegs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Cash From Investing Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885 Cash Flow from Financing Activities Line of Credit Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Long Term Liability Repay $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 Net Cash From Financing Activities $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 NET CASH FLOW $15,879 $18,227 $16,304 $17,782 $18,533 $16,565 $15,059 $17,081 $15,734 $16,248 $17,081 $209,547 Beginning Cash $175,541 $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032 Ending Cash $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032 $150,485

Months of Cash 5.3 6.1 6.8 7.3 7.6 7.7 8.2 8.7 9.0 9.4 10.1 3.4

Understand your fixed

• verhead

Manage inventory, A/R, A/P Use your tech Focus on generating working capital Align overhead spend with future demand Review contracts Eliminate, automate, consolidate Evaluate all capital projects using cash flows via NPV analysis Minimize pricing erosion

Be sure to use divisional accounting to track profitability by each arm of the brewery Periodically review your COA Review POS entry as it relates to the accounts in your COA Culture Holistic view of the enterprise

Short-Term Forecasting Best Practices

Long-Term Forecasting Best Practices

And Don’t Forget…

Cash Flow Statement

Historical View

• f How Cash

Moved

Cash Flow Forecast

Future Plan of Sources and Uses of Cash

Summary Sheet

AR Detail

AP Detail

OpEx Detail

Investing & Financing Detail

Q&A

• MASTERING

CASH FLOW

AUDRA GAIZIUNAS - MARIA PEARMAN, CPA