Definitive Business Plan, Second Edition, The

Balance sheets and cash flow mechanics

Creating balance sheets and cash flow is very simple. In practice, you will prob- ably work methodically through the figures that you have produced so far – sales, capital spending, profit and loss – and create the cash flow and balance sheet from them as you go. An alternative is to work in the other direction. To aid your understanding, we will do both.

First, consider how you create balance sheet and cash flow projections from the capital outlays and current expenditure forecasts already in your possession. There is a short cut, but for the moment, imagine that you are going to work through your expenditure forecast line by line. It is useful to see how the balance sheet and cash flow forecasts shape ...