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Thread: Not a financial mind...

  1. #11
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    We use Omni in our medium sized business and it seems to work well enough for us.Our books are audited every year and there aren't many changes from the Auditors side.We have a fantastic book keeper though,with great attention to detail.Dave is 100% correct with cashflow being reality.

    The Omni system won't give you a cash flow statement or forecast and I doubt most others would either.

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    Quote Originally Posted by Dave A View Post
    The trouble with any income statement is it tells you absolutely nothing about your cash flow.

    I'm not familiar with Omni, but what you need is a cash flow statement. If the software doesn't produce one by default, you can extract one from movements in the balance sheet
    Can you elaborate on this Dave A? How do I extract a cashflow report from the balance statement

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    Hi Hannes

    It is probably one of the more difficult statements to balance.

    Here is a template from Microsoft that should assist
    12 month cash flow statement1.xlsx

  4. #14
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Hannes Botha View Post
    Can you elaborate on this Dave A? How do I extract a cashflow report from the balance statement
    By comparing two time points, and then examining the changes in the amounts of each balance sheet account (or asset/liability category).

    The quick answer as to what you overall cash flow movement has been will be given by the change in the total of cash and cash equivalents (bank account, cash on hand etc.). In most instances, you'll find this is a very different number to your profit.

    But of course, from a business management point of view, this is only part of the information you need. You also need to understand why there is a difference between the profit and cash equivalent change.

    Looking at current account types:
    Stock on hand has increased - part of your profits have been spent on stock.
    Debtors have increased - part of your profits has been spent on financing debtors.
    Creditors have increased - you have released cash into your business.

    Obviously a decrease has the opposite effect.

    Then there are the long term capital account effects, and unfortunately properly examining this can get a bit fiddly - so I'll stick to a simple example:
    Long term liabilities have reduced - part of your profits have been spent on capital repayments (and even saying that can be way too simplistic).

    Does any of that help?

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    Dave A. I get it and it makes perfect sense.

    One should actually find a "factor"....a relationship or ratio between your net profit, your current stock valuation, your debtors book and your creditors book, and get an ideal "factor" to try and achieve

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