cash-flow-analysislisted

# Cash Flow Analysis Determines whether a business generates enough cash to sustain operations, growth, and obligations. ## Methods & Core Metrics * **Direct method**: cash from customers − cash paid for operations. * **Indirect method**: net income + non-cash items (depreciation) ± changes in working capital. * **Free Cash Flow (FCF)** = OCF − Capex — the cash truly free for dividends/debt/investment. * **Cash Runway** = Current cash ÷ monthly burn rate — months before cash runs out (without additional funding). ## Scope & Safety * **Use for**: assessing debt repayment capacity, planning financing, detecting "earning without cash" situations. * **Do not use for**: profitability assessment alone (cash flow ≠ profit) — combine with the Profit & Loss statement. * A single positive FCF period is not a guarantee; use multi-period trends (min. 3 months) plus seasonality. * Projected figures must be labeled as assumptions, not facts. ## Worked Example Input: OCF 150 million/month, Capex 40 million/month, cash 300 million, burn 25 million/month (if revenue stops). Output: FCF = 150 − 40 = **110 million/month**; Runway = 300 ÷ 25 = **12 months**. Interpretation: the business generates positive cash; still needs a 3–6 month runway buffer for emergencies.