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MASTERING CASH FLOW
AUDRA GAIZIUNAS - MARIA PEARMAN, CPA
MARIA PEARMAN, CPA
Author, Small Brewery Finance
PERKINS & CO, PC
AUDRA GAIZIUNAS
FRACTIONAL CEO, CFO
BREWED FOR HER LEDGER, LLC
BA FINANCE COMMITTEE
BHRAMARI BREWING COMPANY
AGENDA
• Cash Flow Statement Overview
• Cash Flow in Detail
• Building a Forecast
• Q+A
• Cash Flow Statement
Purpose: Bridges the Balance Sheet and Income Statement
Components:- Operating Activities- Investing Activities- Financing Activities
• LIQUIDITY RATIOS
• EFFICIENCY RATIOS
• CONSIDER ADDING DAYS (OR MONTHS) OF CASH ON HAND TO THE BOTTOM OF YOUR CASH FLOW
HOW DO WE MONITOR THE HEALTH OF OUR CASH POSITION?
CASH FLOW RULES
Cash income -> Cash inflow
Cash loss -> Cash outflow
Asset increase -> Cash outflow
Asset decrease -> Cash inflow
Liability increase -> Cash inflow
Liability decrease -> Cash outflow
Equity increase -> Cash inflow
Equity decrease -> Cash outflow
Operating Activities (Generally short term area of focus)
Investing and Financing Activities (Generally long term area of focus)
Month 1
Net Cash Generated By Operating Activities 133,000
Cash Flow from Investing Activities
Purchase of Property & Equipment (72,000)
Sale of Property & Equipment 6,000
Purchase of Land 0
Net Cash From Investing Activities (66,000)
Cash Flow from Financing Activities
Line of Credit Borrowing 0
Payment of Dividends 0
Long Term Liability Repay (Principal) (4,830)
Net Cash From Financing Activities (4,830)
NET CASH FLOW 62,170
Beginning Cash 176,453
Ending Cash 238,623
Months of Cash 5
ACTIVITIES THAT
IMPACT EACH
SECTION---
BEFORE/AFTER
REVIEW
ABC Brewing
Cash Flow Statement
For the 6 months ended November 30, 2020
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Cash Flow From Operations
Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)
Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477
Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069
(Increases)/Decreases in Accounts Receivable 0 0 0 0 0 0
(Additions)/Depletions of Inventory 0 0 0 0 0 0
Increases/(Decreases) in Accounts Payable 0 0 0 0 0 0
Net Cash From Operating Activities (12,793) (12,185) (11,695) (12,185) (12,185) (10,225)
Cash Flow from Investing Activities
Purchase of Property & Equipment 0 0 0 0 0 0
Sale of Property & Equipment 0 0 0 0 0 0
Deposits on Kegs 0 0 0 0 0 0
Net Cash From Investing Activities 0 0 0 0 0 0
Cash Flow from Financing Activities
Line of Credit Borrowing 0 0 0 0 0 0
Dividends 0 0 0 0 0 0
New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0
Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
NET CASH FLOW (17,623) (17,035) (16,565) (17,076) (17,096) (15,157)
Beginning Cash 37,645 20,022 2,987 (13,578) (30,654) (47,750)
Ending Cash 20,022 2,987 (13,578) (30,654) (47,750) (62,907)
Months of Cash 0 0 0 -1 -1 -1
ABC Brewing
Cash Flow Statement
For the 6 months ended November 30, 2020
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Cash Flow From Operations
Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)
Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477
Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069
(Increases)/Decreases in Accounts Receivable 0 24,100 500 2,200 0 0
(Additions)/Depletions of Inventory 0 0 0 0 0 0
Increases/(Decreases) in Accounts Payable 11,650 22,300 0 0 0 0
Net Cash From Operating Activities (1,143) 34,215 (11,195) (9,985) (12,185) (10,225)
Cash Flow from Investing Activities
Purchase of Property & Equipment 0 0 0 0 0 0
Sale of Property & Equipment 0 0 0 0 0 0
Deposits on Kegs 0 0 0 0 0 0
Net Cash From Investing Activities 0 0 0 0 0 0
Cash Flow from Financing Activities
Line of Credit Borrowing 0 0 0 0 0 0
Dividends 0 0 0 0 0 0
New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0
Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
NET CASH FLOW (5,973) 29,365 (16,065) (14,876) (17,096) (15,157)
Beginning Cash 37,645 31,672 61,037 44,972 30,096 13,000
Ending Cash 31,672 61,037 44,972 30,096 13,000 (2,157)
Months of Cash 1 1 1 1 0 0
Actions taken with Accounts Receivable and Accounts Payable
ABC Brewing
Cash Flow Statement
For the 6 months ended November 30, 2020
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Cash Flow From Operations
Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)
Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477
Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069
(Increases)/Decreases in Accounts Receivable 0 24,100 500 2,200 0 0
(Additions)/Depletions of Inventory 5,200 4,400 1,600 0 0 600
Increases/(Decreases) in Accounts Payable 11,650 22,300 0 0 0 0
Net Cash From Operating Activities 4,057 38,615 (9,595) (9,985) (12,185) (9,625)
Cash Flow from Investing Activities
Purchase of Property & Equipment 0 0 0 0 0 0
Sale of Property & Equipment 0 0 0 0 0 0
Deposits on Kegs 0 0 0 0 0 0
Net Cash From Investing Activities 0 0 0 0 0 0
Cash Flow from Financing Activities
Line of Credit Borrowing 0 0 0 0 0 0
Dividends 0 0 0 0 0 0
New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0
Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)
NET CASH FLOW (773) 33,765 (14,465) (14,876) (17,096) (14,557)
Beginning Cash 37,645 36,872 70,637 56,172 41,296 24,200
Ending Cash 36,872 70,637 56,172 41,296 24,200 9,643
Months of Cash 1 2 1 1 1 0
Actions taken with Inventory
LIABILITIES AND EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable (A/P) 262,591.35
Total Accounts Payable $ 262,591.35
Credit Cards
Capital One 11,238.99
Total Credit Cards $ 11,238.99
Other Current Liabilities
Keg Deposits 6,876.00
Sales and Use Tax Payable 9,082.13
Total Other Current Liabilities $ 15,958.13
Total Current Liabilities $ 289,788.47
Long-Term Liabilities
Note Payable 435,300.00
Total Notes Payable $ 435,300.00
Total Long-Term Liabilities $ 435,300.00
Total Liabilities $ 725,088.47
Equity
Member's Equity
Total Member's Equity $ 154,731.39
Retained Earnings 470,278.41
Net Income 37,190.87
Total Equity $ 662,200.67
TOTAL LIABILITIES AND EQUITY $ 1,387,289.14
Total
ASSETS
Current Assets
Checking 41,669.69
MM Savings 18,256.08
Paypal 549.58
Total Bank Accounts $ 60,475.35
Accounts Receivable
Accounts Receivable (A/R) 47,713.76
Total Accounts Receivable $ 47,713.76
Other Current Assets
Employee Cash Advances 1,728.00
Inventory- Finished Goods
Inventory- Finished Goods- Kegged 13,142.82
Inventory- Finished Goods- Packaged (Case/Bottle) 10,290.27
Total Inventory- Finished Goods $ 23,433.09
Inventory- Merchandise 10,314.16
Inventory- Packaging 56,465.81
Inventory- Raw Materials 71,409.50
Inventory- WIP 9,859.11
Prepaid Insurance 10,958.55
Prepaid Hop Contract 58,360.13
Undeposited Funds 3,028.21
Total Other Current Assets $ 353,745.67
Total Current Assets $ 461,934.78
Fixed Assets
Accumulated Amortization -17,273.64
Accumulated Depreciation -180,822.23
Furniture & Fixtures 42,455.76
Leasehold Improvements 342,101.32
Organizational Cost 29,203.82
Production Equipment 311,283.34
Restaurant Equipment 139,586.69
Startup Costs 152,576.11
Vehicles 96,928.31
Total Fixed Assets $ 916,039.48
Other Assets
Security Deposits 7,300.00
Total Other Assets $ 7,300.00
TOTAL ASSETS $ 1,385,274.26
ABC Brewing
Balance SheetAs of April 30, 2020
Review the Balance Sheet Regularly!
SHORT TERM ACTIVITIES LEAD TO LONG TERM DECISIONS
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Flow From Operations
Net Income $12,106 $14,462 $15,959 $15,477 $14,486 $12,418 $13,356 $13,364 $12,539 $12,548 $13,389 $5,398
Depreciation & Amortization $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999
Interest Expense $7,121 $7,113 $7,105 $7,097 $7,089 $7,081 $7,073 $7,064 $7,056 $7,048 $7,039 $7,031
(Additions)/Depletions of Inventory $0 $0 $3,412 $1,444 $306 $414 $2,022 $0 $514 $0 $0 $1,743
Net Cash From Operating Activities $24,226 $26,573 $24,650 $26,128 $26,879 $24,911 $23,405 $25,427 $24,080 $24,594 $25,427 $15,684
Cash Flow from Investing Activities
Purchase of Property & Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885
Purchase of Distribution Vehicles $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Deposits on Kegs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Cash From Investing Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885
Cash Flow from Financing Activities
Line of Credit Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long Term Liability Repay $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346
Net Cash From Financing Activities $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346
NET CASH FLOW $15,879 $18,227 $16,304 $17,782 $18,533 $16,565 $15,059 $17,081 $15,734 $16,248 $17,081 $209,547
Beginning Cash $175,541 $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032
Ending Cash $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032 $150,485
Months of Cash 5.3 6.1 6.8 7.3 7.6 7.7 8.2 8.7 9.0 9.4 10.1 3.4
Understand your fixed overhead
Manage inventory, A/R, A/P
Use your tech
Focus on generating working capital
Align overhead spend with future demand
Review contracts
Eliminate, automate, consolidate
Evaluate all capital projects using cash flows via NPV analysis
Minimize pricing erosion
Be sure to use divisional accounting to track profitability by each arm of the brewery
Periodically review your COA
Review POS entry as it relates to the accounts in your COA
Culture
Holistic view of the enterprise
Short-Term Forecasting Best Practices
Long-Term Forecasting Best Practices
And Don’t Forget…
Cash Flow Statement
Historical View of How Cash
Moved
Cash Flow Forecast
Future Plan of Sources and Uses of Cash
Summary Sheet
AR Detail
AP Detail
OpEx Detail
Investing &
Financing Detail
Q&A---
MASTERING CASH FLOW
AUDRA GAIZIUNAS - MARIA PEARMAN, CPA