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Monthly Cash Flow Forecast Model

Inputs, assumptions, processing, and outputs in a cash flow forecast model

Written by

CFI Team

Published April 1, 2023

Updated July 7, 2023

Monthly Cash Flow Forecast Model

With a rolling monthly cash flow forecast, the number of periods in the forecast remains constant (e.g., 12 months, 18 months, etc.).  The forecast is rolled forward every time there is a month of historical data to input.  Rolling forecasts work best when key cash flow drivers are modeled explicitly and directly drive forecast cash flow inputs.  We’ll look at the structure of a robust and flexible monthly cash flow forecast model for a retail store business in the following sections.

Inputs and Assumptions

Here are five important points to creating a strong input section for a cash flow forecast model:

Image Source: CFI’s FP&A Monthly Cash Flow Course.

1. Key cash flow drivers should be modeled explicitly.

In our example, a retail store business should start with the number of stores it plans to operate each month, then build up from there, based on the number of square feet and sales per square foot.  This will help the business to compute its revenue.

2. Inputs should only need to be input once.

It is important to group all inputs in the assumptions section so users can easily find, add, and modify them.

3. Inputs should be organized logically.

This helps users of the model to quickly understand and update the model when they first jump into it.

4. All model inputs should be of the same color.

Using identical colors for inputs allows users to easily distinguish between inputs and other calculated outputs.  Most financial models use a blue font or yellow shading for inputs, and black font for formulas.

5. Document your sources for model inputs where possible. Processing

The processing section of a cash flow forecast model is located on the right-hand side of the historical results.  All cells in this section should be in formulas.

Image Source: CFI’s FP&A Monthly Forecasting Course.

1. Model calculations and processing should be transparent and easy-to-follow.

Use step-by-step calculations that are short in length. If the formulas are becoming too long, it is always a good practice to break them down into simple steps to allow efficient auditing and updates.

2. Hard-coded calculations should be avoided.

Everything to the right of the historical results should not be hard-coded.  All calculations should draw on explicit input drivers.

3. Put complicated calculations and processing on a separate worksheet.

Keep only the final figures on the output worksheets, and separate long and complicated formulas and calculations on another section of the model or worksheet.

4. Document how and why complicated calculations are structured.

This allows easy usability and audit-ability and brings confidence to the general process. All formulas should be transparent, clear, and well-documented so people can easily understand how the model works.

Outputs

The output section contains all the important figures we would like to get out of a cash flow forecast model.

Image Source: CFI’s FP&A Monthly Financial Modeling Course.

1. Models outputs should be easy to find and understand. 2. Model outputs should be grouped logically in one area.

Outputs are typically placed at the bottom of the cash flow model and grouped together using the Grouping function in Excel.

3. Model outputs should be formula-driven with no hard-coding. 4. Outputs should provide key results to aid decision-making.

Charts and graphs summarize the health of the business, point out any issues that need to be considered or addressed, and make it easy for executive management to understand what is going to happen over the period of the forecast and, thus, make important decisions.

Categories of Cash Flow Forecast

A rolling monthly cash flow forecast can be derived from a balance sheet and income statement driven by explicit inputs.  There are three categories of cash flow forecast:

Operating cash flows forecast

Starting with net income from the income statement, add back any non-cash expenses that are included in the income statement such as depreciation from the PP&E breakdown.

    Adjust for changes in operating assets and liabilities (or working capital). Examples of working capital are trade and other receivables, inventories, and trade and other payables.

      Forecast working capital using working capital ratios such as receivable days, inventory days, and payable days. For a monthly cash flow forecast, the following ratios should be used:

      Monthly accounts receivable = Receivable days 30 * Sales

      Monthly accounts payable = Payable days 30 * Cost of sales

      Monthly inventory = Inventory days 30 * Cost of sales

      Investing cash flows forecast

      Cash outflows include money invested in property, plant, and equipment (PP&E) in the form of capital expenditures or acquisitions of new businesses.

      Cash inflows include proceeds from disposals of PP&E or businesses.

      Financing cash flows forecast

      Cash inflows include cash raised by issuing equity or debt.

      Cash outflows include cash used to repurchase or repay equity or debt, and dividends paid out.

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      Citation Flow And Trust Flow: All That You Want To Know

      Have you ever wondered what citation flow and trust flow are? It can be confusing for those who don’t know about them. But understanding their importance is essential when it comes to improving online visibility and presence. Citation Flow and Trust Flow are both metrics that measure the authoritative status of a website or web page by analyzing how many other websites link to them. They can significantly affect your ranking in search engine results as well as guide people towards valuable sources of content. In this blog post, we’ll dive deep into the similarities between Citation Flow vs Trust Flow, explain why they’re important, and provide useful tips on utilizing each metric optimally to boost your overall SEO performance.

      What is Citation Flow?

      Citation flow is a metric used to know how many links are pointing to a site. It helps you determine the quality or influence of that site. This metrics focus on the number of links rather than the quality. 

      The word “influential” in this context has a unique meaning. It determines how much a blog or site can impact its readers. If more domains point to a page, it considers the page more influential.

      The trust flow is also a determining factor for citation flow. An increase in the trust flow is likely to increase the citation flow. However, there is no stringent rule on how the increase in citation flow affects the trust flow.

      In simple terms, if Trust flows increase by 10%, that necessarily doesn’t mean the citation flow will increase with the same percentage.

      Similarly, no rule says an increase in citation flow will increase the trust flow.

      For instance, suppose you got some backlinks from sites with high citation flow. Even with fewer inbound links, you will get a big citation boost in such incidents.

      Trust flow is also essential in this matter. Your site will be negatively affected if sites with a high citation but low Trust flows link with you. 

      What is Trust Flow?

      Trust flow is a metric to decide the trustworthiness of a site. Your site will be considered more trustworthy if you have more quality backlinks.

      You will have a greater trust flow if trustworthy and authoritative backlinks are linked to your site.

      You must probably wonder why trust flow numbers are lesser than citation flow.

      This is because not every backlink carries the same quality. This means your site may have hundreds or thousands of backlinks. That does not necessarily mean these links are trustworthy. Your site’s trust flow only increases if you receive quality backlinks.

      Here is the truth- you may try harder to eliminate bad links from your site. However, you will always get some auto-generated bad links from various directories or unreliable sources.

      Hence, the chances of getting high-quality backlinks are always low. As a result, the Trust flow rarely overtakes the citation flow. 

      Experts believe high trust flow is linked to a site’s organic traffic.

      A site with a high trust flow will likely have a high-quality backlink portfolio. This means google boosted the ranking of the site. In other words, a high trust flow makes google and other search engines believe your site has high-quality content. 

      Trust Flow and Citation Flow Ratio

      The average Trust to citation flow ratio should not be lower than 0.5. However, 1 remains the most desirable ratio. 

      The ratio between trust and citation flow determines the overall worthiness of a website.

      If a site has a citation flow of 60 and a trust flow of 30, the ratio is 2:1 or 0.5. The maximum ratio usually doesn’t exceed 0.9 in most cases. However, for google, the Trust to citation ratio could look like 98:99.

      If the trust flow is significantly less than the citation flow, it clearly means your site has many low-quality backlinks. If that happens, you need to address the matter right away. 

      You can remove bad links from your site without affecting your ranks. Removing bad links is good for your site. Imagine some visitors coming to your site and seeing inappropriate links or popups from bad links. Bad links give a bad name to your site. Removing these links is the only solution. 

      How to Measure Flow Metrics?

      Citation flow and trust flow are flagship metrics created by chúng tôi in 2012. The digital marketing industry now uses these metrics to measure the health of an URL.

      To measure these flow metrics, do the following −

      Go to the official website of Majestic SEO. 

      Enter the URL and select fresh index (set at default).

      Hit search

      The window will display the backlink profile of the URL along with the flow metrics.

      Non-signed-up users get limited usage as per the policy. To extend your usage limit, you have to register a free account. 

      To check multiple URLs, you need to use the bulk backlink checker tool and the raven SEO tools alongside the Majestic SEO API.

      Benefits of Majestic SEO

      It provides exceptional link quality analysis

      It helps identify the reason behind the penguin penalty 

      It prevents the accumulation of irrelevant links on your site

      It assists in identifying top influencers in your niche

      It allows content writers and bloggers to find quality content

      Tips to Increase Flow Metrics Focus on Trust Flow

      Pay more focus to gain quality links. This will increase your trust flow and maintain a healthy Trust to citation ratio. Increasing your citation flow with low-end links is of no use. Ultimately, quality always wins over quantity.

      Aims for Authoritative Backlinks

      A single authoritative backlink holds much more power than 1000 low-quality backlinks. Plus, you should also remove all unnecessary backlinks to increase your flow ratio. A low flow ratio can hurt your site’s worthiness.

      Don’t go Overboard with Backlinks

      Indeed backlinks are great, but keep them within limits. If your site is new, you should focus more on creating quality content. Then you should focus on building backlinks. A great way to build backlinks is through guest posting. However, you should keep it to a minimum. 

      Stay within your Niche

      Getting irrelevant backlinks to your content won’t increase your trust flow. This is because MajesticSEO calculates your topical trust scores. This means to rank higher in google, you need higher trust scores in your niche.

      Go for Internal Linking

      A well-planned internal linking strategy can increase your trust and citation flow. If you link all the influential pages to your homepage, this could improve your flow metrics. Having backlinks to the homepage and internal pages can significantly appreciate your flow metrics.

      Use Trustworthy Backlinks for More Trust Score

      Regarding the quality of content, you need citations and references from authoritative links. For this, TLDs like .gov and .edu are pretty essential. It helps improve your site’s trust score. 

      Conclusion

      Overall, Citation Flow and Trust Flow are two very important metrics of Link Analysis. For any website to be successful in terms of gaining organic search engine traffic, it needs to have a strong balance between the two. This means that websites need to have a varied and diverse range of inbound links from sources across the internet in order for the algorithm to recognize their importance. Furthermore, these links should come from high-authority sites as much as possible, as this will increase the overall Trust Flow score of the website. To ensure success with link analysis, webmasters should ensure that all of their incoming links are both varied and from credible sources. With proper understanding of Citation Flow and Trust Flow as outlined here, webmasters can set themselves up for success when it comes to SEO in general.

      Lava Flow Swiftly Approaching Hawaiian Town

      Fence

      Lava overruns a fence on October 28

      Compared to most natural disasters, a lava invasion does not move all that fast. Nowhere is that more evident than the small Hawaiian community of Pāhoa, where a lava flow has been approaching the town since June 27. Now, the lava has finally arrived on the outskirts of town, overrunning private property. In the picture above, the lava behind the fence is chest-high. Geologists are keeping a close eye on the progress of the flow, which currently seems to be headed straight for Pāhoa Village Road, one of the village’s main streets, and beyond that, for Highway 130, a traffic artery travelled by 10,000 cars a day. It’s already crossed over one road, Cemetery Road, and a cemetery (presumably the road’s namesake).

      Map

      An annotated photograph showing the progress of the lava flow at 11:30 am on October 27

      Lava flow

      A shed is consumed by the lava flow on October 25

      Uses And Examples Of Cash Equivalents

      Definition of Cash Equivalents

      Cash equivalents are those short-term investment securities that are highly liquid, i.e., which can be easily converted into cash. They generally have a maturity period of 90 days or less and do not have any restrictions attached to them, which makes it easy to convert them into cash in a shorter period. They usually carry a low level of risk and high credit quality.

      Explanation

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      Examples of Cash Equivalents

      Here are some examples :

      Commercial Papers: Large corporations issue a bearer instrument or promissory note to satisfy their immediate liabilities.

      Treasury Bills: Treasury bills or T- bills are generally government securities. Once the government pays the full maturity amount for the mature securities, they normally offer no interest but are issued at a discount.

      Certificate of Deposit: Banks offer certificates of deposit (CDs) to raise money from the secondary market. CDs have a fixed interest rate and a set maturity time.

      Marketable Securities: These products are exchanged on a public exchange and include both equity and debt. They are regarded as cash equivalents since their pricing is readily available on the open market.

      Other Money Market Instruments: Apart from the above, there are other money market instruments as well, such as bankers’ acceptances, bills of exchange, repurchase agreements, short-lived mortgages, asset-backed securities, etc.

      What Does Not Belong in Cash Equivalents?

      The concept behind cash equivalents is that there shouldn’t be any restrictions on the particular investment instrument and that it can be easily converted into cash.

      Another exception is inventory, a current asset that cannot be readily converted into cash in a general market scenario.

      Uses of Cash Equivalents

      These have a number of uses, as follows:

      They can be applied to short-term obligations of the company, including account payables.

      They can be used to make purchases such as operating costs, inventory, and other items.

      They indicate the liquidity position of the company. The higher the cash equivalent, the higher the liquidity.

      They help in the financing of acquisitions.

      Advantages

      The company often invests to earn interest on the funds until they do not need them.

      They are highly liquid, and thus, they can be easily converted into cash at a time of need.

      Sometimes it helps in financing acquisitions of the company.

      In a way, it is a loss of revenue. Suppose a company invested more cash equivalents than necessary due to market conditions or other reasons. It would undoubtedly result in a loss of income because the company would have earned a higher rate of interest if it had invested the money somewhere else.

      They generally have a lower rate of return, and they need help to keep up with the inflation rate.

      Conclusion

      It is clear from the above discussion that cash equivalents are an integral part of the company’s current assets and working capital. It helps maintain liquidity, meet operating expenses, and pay off short-term debts. The amount of cash equivalent on the balance sheet provides information regarding the company’s operating strategy. It differs and depends on the industry the company is operating in and its growth stage and strategy.

      Recommended Articles

      We hope that this EDUCBA information on “Cash Equivalents” was beneficial to you. You can view EDUCBA’s recommended articles for more information.

      Power Automate Flow: Usage And Types Explained

      In this tutorial, we’ll learn more about Power Automate flow and its uses. We’ll also talk about the different types of flow that we can use for various tasks and scenarios.

      We know that Power Automate is used to make flows. But what exactly is a flow?

      In simplest terms, a flow is a visual representation of any task. You can think about it as a storyboard as to what your task looks like.

      Let’s now talk about the types of flows that Power Automate allows you to make. For each flow, we’ll talk about the type (what’s the flow called), the trigger (what actually activates the flow), and the description (what the flow actually does).

      The three basic types of a Power Automate Flow are the Instant flow, the Automated flow, and the Scheduled flow. They are all responsible for automating any repetitive tasks that you have. They also contain the same feature in the flow diagram. The only thing that’s different about these types of flow is their trigger.

      An automated flow is based on an event that occurs outside your control. For instance, you can have a flow where the trigger is a tweet and the action is an email. The flow is automated because it’s triggered based on events and not on user intervention.

      An example of this might be when you create a flow that sends an email to yourself every time someone tweets about your company. Therefore, the trigger itself is the tweet about your company, and the action is the email to yourself.

      Flows can also be based on time. The scheduled flow is based on a recurring time. 

      So if you have a task on your desktop where you move one file to another file, or if you open up a desktop application and do something on it, then you would use a UI flow and not one of the previously mentioned flows.

      But again, a UI flow can be triggered by any of the three events. Hence, a UI flow can be an instant, automated, or scheduled flow. The only difference is that instead of using connector applications, the task actually happens on your desktop or on a particular website.

      The final type of flow that we’ll discuss is the Business Process flow. The purpose of this flow is to guide a user through a business process.

      Let’s say you have an invoicing system in your business and you want to guide the users to the types of invoices they should be redeeming and paying out. You can automate that with a flow where they fill out pieces of information. Based on that information, they’ll know the next steps in the process. It’s definitely a great help in guiding a user through an already established business process.

      The Business Process flow is the most unlikely flow because instead of automating a task, it only helps people fill in an already established task by guiding them through the right pathway.

      Flows can obviously have multiple actions. You can have a flow that’s triggered by a tweet, and triggers different actions. It can send you an email and add it to your Trello card or list of to-dos. Then, it can send you a slack message as well.

      Flows can also have very complex logic. You can have a flow wherein if it’s triggered by a tweet, it then checks if the tweet is something that you want to keep or not.

      Let’s say the condition is if the tweet about your brand is either positive or negative. Action A is for you to retweet it if it’s positive. If it’s not positive, then Action B is for you to receive an email and store it away. You can even set a Trello card for yourself to reply to that person and ask them why they said negative things about your company.

      Flows can also have loops as well. This is a bit more complicated, but you can basically have flows that continuously loop through until a certain event occurs.

      For example, let’s say you want to keep messaging someone on Slack every five seconds until they’ve sent you a file. You can definitely integrate that into your flow.

      You can have an approval system wherein after an action, something gets sent to someone else. Then based on their response, varying things may occur. Hence, they can choose either of the actions that they want to occur.

      In summary, flows are visual representations of tasks. All of them have a trigger component and an action component. They can be simple or very complex, depending on the tasks you are trying to automate.

      We’ll talk more about these flows in our future tutorials. For this blog, I just want you to get a quick sense as to what each type of flow does and when you can possibly use them. 

      I hope you’ve enjoyed this one! All the best,

      Henry

      How To Find Ipad Model Name & Model Number

      Need to find the model name and model number of an iPad? Many iPad tablets visually look the same or similar, so you can’t always tell which iPad model a device is simply by looking at it. Fortunately, there’s an easy way to quickly find the iPad product name and iPad model number.

      We’ll show you how to see the iPad model name and model number directly in the Settings of the device.

      Note this is seeking to find the iPad model name (like “iPad Pro 12 inch), not the name of the device that is user-provided (like “Pat’s iPad”).

      How to Find iPad Model Name & iPad Model Number

      Open the Settings app on the iPad

      Go to “General” and then go to “About”

      Directly under Model Name, find the iPad “Model Number”

      The iPad model name is sometimes something obvious like “iPad Pro (11-inch)” or something a little more technical like “iPad (6th generation)” which implies the generation of that particular release.

      The iPad model number is usually in the format of hexadecimal letters and numbers with a slash, for example an iPad model number might be something like MTXN2LL/A.

      Note that iPad model name and iPad model number are not the iPad serial number, which is unique to each specific iPad device. Instead the iPad model name and model number are generic for particular makes of the device.

      What iPad Model Number Do I Have? Starting with Letter A?

      Here’s another way to how to find specifically what iPad model number you have in a different identifying format which starts with the letter “A”, the model “A” number is different compared to the product model number.

      A1219, A1337 – iPad 1

      A1395, A1396, A1397 – iPad 2

      A1403, A1416, A1430 – iPad 3

      A1458, A1459, A1460 – iPad 4

      A1822, A1823 – iPad 5

      A1893, A1954 -iPad 6

      A2197, A2200, A2198 – iPad 7 (2024) 10.2

      A1474, A1475, A1476 – iPad Air 1

      A1566, A1567 – iPad Air 2

      A2152, A2123, A2153, A2154 – iPad Air 3 (2024)

      A1584, A1652 – iPad Pro 12.9 first generation

      A1670, A1671 – iPad Pro 12.9 second generation

      A1876, A2014, A1895, A1983 – iPad Pro 12.9 third generation (2024)

      A1980, A2013, A1934, A1979 – iPad Pro 11 first generation (2024)

      A1673, A1674, A1675 – iPad Pro 9.7

      A1701, A1709 – iPad Pro 10.5

      A1432, A1454, A1455 – iPad Mini

      A1489, A1490, A1491 – iPad Mini 2

      A1599, A1600 – iPad Mini 3

      A1538, A1550 – iPad Mini 4

      A2133, A2124, A2126, A2125 – iPad Mini 5 (2024)

      This can be a little confusing but if you’re working with an Apple tech or troubleshooting your iPad the model names and model numbers may be used.

      This works for all iPad, iPad Pro, iPad Air, iPad mini, as long as they are running a modern version of iOS or iPadOS system software. Earlier versions of iOS and iPadOS did not readily show the iPad Model Name in the same settings screen.

      You may need to find the iPad model name or iPad model number for troubleshooting, warranty purposes, for a device repair, for compatibility with some specific software or hardware, amongst other reasons.

      Similarly, you can also find the iPhone model name and iPhone model number in the same Settings screen on those devices, as well as for iPod touch. finding a Mac model name and model year and finding the model identifier number of a Mac is different however, since MacOS is different from iOS and iPadOS.

      It’s worth mentioning this is not the only information that is sometimes referred to as a model number. Somewhat confusing is that the iPad model number is different from the device model number identifier which is sometimes printed onto the device itself, but you can find the device model number identifier elsewhere in Settings if that information is needed for some reason, but for most users only the iPad model name and model number are going to be necessary when checking for device compatibility, warranty information, repair information, and for other purposes. To add to the confusion, even Apple on a support document refers to the different device number identifier found on the back of devices as a model number, despite the Settings app in iOS and iPadOS also calling a different number a model number – clear as mud, as they say! Either way, either number will be able to tell you which iPad device you have or are working with.

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