Question

I need to determine whether an existing business should take on a new expansion or not. What would be the layout for the cash flow statement? Do I enter the details for both the existing business and the expansion separately in the one cash flow?

Answer 1

	LAYOUT FOR CASH FLOW STATEMENT
	Year	0	1	2	3	4	5	6	..till life of project
	Initial Cash flows:
	Cash flow due to investment in Fixed assets
	Cash flow due to Increase in working capital
	Total Initial Cash Flow
	Operating Cash Flows:
	Additional units sold after expansion
	Sales price per unit
	Variable cost per unit
	Sales Revenue
	Variable cost
	Fixed operating cost
	Annual Depreciation
	Before tax Income
	Tax expenses
	After tax income
	Add: Depreciation
	Operating Cash Flow
	Terminal Cash flows:
	Release of additional working capital
	After tax cash flow from salvage
	Total Terminal cash flow
	NET CASH FLOW
	In case any revenue of existing product is affected by expansion (increase or decrease), the same should be included
	Otherwise details of existing business need not be included