The Principles of Finance, Essay Example

Introduction

The paper will begin with an introduction that contextualizes the cash flow phenomena in the business setting. In the introduction, the paper will define some common terms and terminologies used in cash flow discussions. The scope of the paper and the specific bias adopted shall be highlighted. The thesis statement will center on establishing cash flow measurements in contemporary business and this will be thoroughly developed within the confines of the paper.

Cash Flow Scenario

In this section, the paper shall construct a typical cash flow incidence by drawing a parallel between personal finance cash flows and business finance cash flows such as is elaborated by Mulford and Comiskey (2005).

Advantages of Cash Flow Determination in Business

In this section, the paper will examine various significant advantages of determining the cash flow of a business establishment. Some advantages such as increasing profitability of a business, helping in selection of investment options, inculcating sound financial practices among others, (Plewa and Friedlob, 1995), shall be elaborated on.

Application of Cash Flow Measurements in Business

There instances when cash flow measurements help a business to remain viable, liquid and profitable (Plewa and Friedlob, 1995). This section of the paper will evaluate the many applications of cash flow measurements in business settings. Such applications as liquidity assessment, profitability evaluations rate of return evaluation and value placing of investment drives shall be discussed in detail.

Types of Cash Flows in Business

In this section, the paper shall discuss the various types of cash flow calculations (such as financing cash flows, operational cash flows, investment cash flows (Plewa and Friedlob, 1995)) and exemplify on how each type is used by managers in day to day operations.

Contemporary Issues in Cash Flow Measurement

Finally, the paper shall detail how cash flow calculations are an important tool in contemporary business ventures. To do this the paper shall exemplify:

• How statement of cash flows are incorporated in business’s financials as spelt out by Denise (2007).
• Assorted ways in which companies augment the cash flow reports (Note the augmentation of cash flows will be discussed in the light of such business operations as a) Sales b) Inventory c) Sales Commissions d) Wages e) Maintenance d) Equipment Leases e) Rent f) Research & Development g) Consulting Fees h) Taxes etc

References

To come up with accurate and reliable data in the discussion, the paper will utilize and source facts from several reliable sources comparatively. All these sources will be cited and well referenced. Some of these references as cited above include:

Denise, O. (2007). Small Business Cash Flow: Strategies for Making your Business a Financial Success. Wiley: New Jersey.

Mulford, C. & Comiskey, E. (2005). Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance. Wiley: New Jersey.

Plewa, J. & Friedlob, G.(1995). Understanding Cash Flow: Finance Fundamentals for Nonfinancial Managers Series. Wiley: New Jersey.