Dynamic Cash Flow Projections » Examples

Every good company needs to make certain assumptions on how they are going to operate in the following 12 months. This is what projections are for. A dynamic projection works as a guiding tool to keep everyone in the company informed of how the future of the organization is going. Some companies even go to the extent of creating a best case, scenario, a worst case, and a probable cash flow scenarios. In these following examples, we will show a simplified version on how these would look like.

Probable Scenario

This following scenario would have the numbers that are the most reasonable if everything stays the same within the company. This is based on past cash flow statements and these are going to be the most realistic expectations for the company.

                              Jan         Feb        Mar        Apr        May 

Beginning Bank Balance        $100,000   $100,000   $100,000   $100,000   $100,000 

Cash Inflows
  Sales                       $50,000    $50,000    $50,000    $50,000    $50,000
Total Cash Inflows            $50,000    $50,000    $50,000    $50,000    $50,000

Cash Outflows  
  Payroll                     $10,000    $10,000    $10,000    $10,000    $10,000
  Rent                        $2,000     $2,000     $2,000     $2,000     $2,000
Total Cash Outflows           $12,000    $12,000    $12,000    $12,000    $12,000

Net Cash Flows                $38,000    $38,000    $38,000    $38,000    $38,000

Ending Cash Balance           $138,000   $138,000   $138,000   $138,000   $138,000

Best Case Scenario

This next scenario is made to illustrate what cash flows would be like if they did their absolute best this year. This is also measured with past statements. The numbers here are increased to a reasonable extent of how the company can perform if they did their absolute best this year.

                               Jan       Feb         Mar       Apr        May

Beginning Bank Balance         $100,000   $100,000   $100,000   $100,000   $100,000 

Cash Inflows
  Sales                         $75,000    $75,000     $75,000   $75,000    $75,000
Total Cash Inflows              $75,000    $75,000     $75,000   $75,000    $75,000

Cash Outflows  
Payroll                         $10,000   $10,000    $10,000    $10,000    $10,000
  Rent                          $2,000    $2,000     $2,000     $2,000     $2,000

Total Cash Outflows             $12,000   $12,000    $12,000    $12,000    $12,000

Net Cash Flows                  $63,000    $63,000    $63,000    $63,000    $63,000

Ending Cash Balance             $163,000   $163,000   $163,000   $163,000   $163,000

Worst Case Scenario

Things don’t always go as planned, so in this Scenario we demonstrate how the company’s numbers would look like if they did their worst this year. These numbers are calculated through past statements and comparing themeselves to previous years in which they had low numbers.

                                 Jan        Feb         Mar       Apr         May

Beginning Bank Balance           $100,000   $100,000   $100,000   $100,000   $100,000 

Cash Inflows
  Sales                          $25,000    $25,000    $25,000    $25,000     $25,000
Total Cash Inflows               $25,000    $25,000    $25,000    $25,000     $25,000

Cash Outflows  
Payroll                          $10,000     $10,000    $10,000    $10,000    $10,000
  Rent                           $2,000      $2,000     $2,000     $2,000     $2,000
Total Cash Outflows              $12,000     $12,000     $12,000   $12,000    $12,000

Net Cash Flows                   $13,000     $13,000      $13,000   $13,000    $13,000

Ending Cash Balance              $113,000    $113,000    $113,000    $113,000    $113,000

As you can see in these examples, the cash flow numbers vary greatly whether the company has a good year or not. However, a company should always keep updating and redefining their cash flow projections as they can vary greatly from month to month. This will keep every employee informed of their current standing and what their future projections could look like.