Financial projections
This query is : Resolved
17 November 2014
I am preparing Financial projections for one of our client which is proposing manufacturing of "X" Product.
1. I have query that while compiling Financial Projections, can we show the negative profitability in first 3 years,but Cash Profit (PAT + Depreciation) is positive.
2. Can We show negative working Capital?
1. I have query that while compiling Financial Projections, can we show the negative profitability in first 3 years,but Cash Profit (PAT + Depreciation) is positive.
2. Can We show negative working Capital?
17 November 2014
SHOWING?????? What do you mean by that? If it is estimated that first 3 years will be LOSS making years, then there is NO harm in disclosing the same to the BANKERS. Never PLAY with the figures....Be true and fair.
17 November 2014
For financial(cash flow) projections add back depreciation.
For working capital show short term borrowings to make it positive.
For working capital show short term borrowings to make it positive.
17 November 2014
The meaning of can we show is that, if the profitability is negative whether it effects our borrowing power.that is what i meant.
17 November 2014
It need not affect the borrowing power as such so long as it is well within the debt equity ratio.
17 November 2014
Does Negetive working capital effects the borrowing bower?
17 November 2014
No. Negative working capital suggests that your company is CASH RICH.
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