Preparing Cash Flow Report For Capital Investment Project

There are many organizations that are investing into new projects with expectation of reaping future benefits from them. Investing in new project requires immediate capital outlay but the return may not be immediate.

After an organization invested in a capital investment project, it would be beneficial to prepare financial projection papers on how to manage the future cash flow on it. The preparation process of the report is simple but not easy if you are a non-finance staff.

The following are some guidelines on how to prepare the cash flow projection report on the project.

Let assumed that the project is expected to generate a stream of cash flow to the organization. It involves taking the changes in day to day cash activities generated or used on the project. When preparing the report, the following guidelines should be taken into consideration.

1. Revenue. 
You should only take in the incremental revenue generated by the project. All other revenues should be excluded.

2. Expenses. 
Similarly to the revenue, you should only take in the incremental expenses incurred by the projects. If the project causes saving in cost or expense, you should also recognized it in your report.

3. Taxes.

Include taxes that are incurred by the project.

4. Working capital.

Any changes in working capital as a result of the project should also be taken into consideration. 
An example of a simple template would be as follows:


Change in revenue 
Less: Change in operation expenses 
Less: Change in depreciation 
Less: Change in tax 
Less: Change in new working capital 
Net operating cash flow from project.

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