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Process Improvement
Published in James William Martin, Lean Six Sigma for the Office, 2021
Improvement projects that reduce the level of accounts receivables increase cash flow because money is received sooner and is available to run the business. If an organization borrows against is accounts receivable, then reducing these incremental costs is also a benefit with interest savings. In some industries such as government contracts, not invoicing in a timely manner, e.g., 90 days, prevents a supplier from invoicing at all and the full cost of the product or service must be written off. These are substantial losses. The improvement process for reducing accounts receivables starts by listing the numbers and types of accounts in different classes based on collection lead times, e.g., less than 30 days, 31–60 days, 61–90 days, and greater than 90 days. The strategy is to look for common root causes for long lead times. Invoices exceeding 90 days are outliers and may have common causes. This type of project if successful will create significant benefits because these collection accounts are normally written off after 90 days. The accounts due in less than 90 days may have different root causes. The goal is to shift these accounts inward toward the 30-day category.
Economic Analysis of Solar Drying Systems
Published in Om Prakash, Anil Kumar, Solar Drying Systems, 2020
Cash flow is considered to be the most important economic concern regarding a solar dryer. In the simplest form, cash flow is the moving in and out of cash within a business. Netcashflow=ReceiptsCredits–ExpensesDebits
The Finance Plan
Published in David C. Kimball, Robert N. Lussier, Entrepreneurship Skills for New Ventures, 2020
David C. Kimball, Robert N. Lussier
Cash flow is important because a company without cash, even though it appears to be a good company, cannot survive because it cannot pay its bills when they are due. The two parts of a cash flow statement are (1) the actual dollars coming into the business as revenues and (2) the money going out of the business to pay its bills. Depreciation or any noncash items (accounts receivable) are not included in the cash flow statement. This statement is also important because we use a cash flow pro forma statement to translate the business plan into future or projected dollars of income and expenses. It forces you to move systematically and logically through your plan, attaching a monetary value to every step. The act of preparing the pro forma cash flow will help determine your financial needs.
Extraction of palm carotene from crude palm oil by solvolytic micellization: economic evaluation and life cycle assessment
Published in Chemical Engineering Communications, 2022
Boon Chin Hoe, Priyangaa Arumugam, Irene Chew M. L., Jully Tan, Chien Wei Ooi
Profitability and sensitivity analyses of the extraction process were also performed. In profitability analysis, cumulative cash flow was applied to realistically estimate the payback period, internal rate of return (IRR) and revenue of the extraction scheme. Cumulative cash flow is the term that can be calculated by adding all the cash flow from the beginning phase of the extraction scheme. The cash flow can be calculated by subtracting the capital and operating cost of the plant from the total sales revenue. The sales revenues include the calculation of production volume and selling price of carotenoid concentrate, FAME, and crude glycerol. The cumulative cash flow was calculated by assuming the lifetime of plant to be 15 years. Lastly, the sensitivity analysis of the extraction scheme was carried out to determine the profitability of the process at the best and worst case scenarios, in which the raw material and carotene-rich product prices were increased and decreased by 20%, respectively.
A stochastic model of cash flow forecasting considering delays in owners’ payments
Published in Construction Management and Economics, 2018
Reza Andalib, Abdollah Hoseini, Behrouz Gatmiri
A negative cash flow appears when the project’s cumulative disbursements surpass the total net receipts, whose main reason can be late or incomplete payments by the owners. In this case, the contractor must procure the required surplus cash through their own capital or bank credit line until the amount is received from the owner is greater than the project expenditures, which incurs financing costs. Many of the projects experience negative cash flow until the final stages of the project, which is when the final payment is received from the owners. This condition occurs mostly when the final payment, which includes retention money, is determined to be higher than the contractor profit margin (Park et al.2005, Paul et al.2012). By increasing the proportion of advance payment, the probability of negative cash flow reduces (Al-Joburi et al.2012).