Question

The following cash outlays are anticipated for a I-year project. Prepare a cumulative cash flow curve. (10 points)

January - $1.1 million; February - $600,000; March - $700,000; April - $1.4 million; May - $1.7 million; June - $2.0 million; July $2.1 million; August - $1.7 million; September - $1.0 million; October - $700,000; November - $400,000; December - $200,000

Answer 1

Cash plays a critical role in the successful operation of your business. A company uses cash to meet its financial obligations and pay its bills. Cash flow statement is used to track the inflows and outflows of cash to and from your business by activity and the net cash generated by those activities over a specific accounting period. Cash flow statement also shows the cumulative cash from the prior and current accounting period.

Cumulative Cash Flow

Add the net cash flows from operations, investing and financing. The total equals the net cash flow for the period. A positive number indicates that your company generated more cash than it spent; a negative number indicates it spent more than it generated. Add this to the prior period’s number -- typically shown as the beginning number on the bottom left of the cash flow statement -- to obtain the cumulative cash. For example, if your company begins the period with $50,000 in cash and generates $20,000 in net cash flow, the cumulative cash flow equals $70,000

The answer is prepared assuming all the months have a outflow since there is - before the numbers and July month has a positive since there is no - before it.

Month	Cash Outlay	Cumulative Cash
Jan	-1.1	-1.1
Feb	-0.6	-1.7
Mar	-0.7	-2.4
Apr	-1.4	-3.8
May	-1.7	-5.5
Jun	-2	-7.5
Jul	2.1	-5.4
Aug	-1.7	-7.1
Sep	-1	-8.1
Oct	-0.7	-8.8
Nov	-0.4	-9.2
Dec	-0.2	-9.4

Cumulative Cash Flow Curve.