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Creating a Statement of Cashflows

1. In Module 3, you will take your income statements and start to construct a cash flow

2 .Using the income statement from Assignment 1, forecast a ten year cash flow using the following assumptions: from 2010-2019

Capital Expenditures of $50,000 per year.
Leasehold Improvements of $10,000 per year.
DSO of 75 Days.
Inventory Turnover of 12 times.
Accounts Payable of 30 days.
Depreciation is constant.
The combined Federal and State Tax Rate is 40%.
There are no additional financing expenses associated with the transaction.
After you have completed your cash flow forecast, calculate a Net Present Value assuming a discount rate of 15%.


Solution Preview

Please see attached Excel file and pay special attention to the comments I made.

NOTE: I made two cash flows. The other one is with the formulas you provided. ...

Solution Summary

How to create a statement of cash flows from income statement