What is a cash flow diagram?
Accounting, project managers and engineers trying to show how much money comes or usually uses a cash flow diagram from the project. The cash flow scheme is a picture or graph divided into uniform parts, each part representing a period of time, such as weeks, months or years. Arrows heading to or away from the diagram represent money that comes or comes out of the project. This diagram helps planners to know how much money is spent on the project and what the potential profit of a cash -based project will be.
The cash flow itself is simple. It starts as a horizontal line, with smaller vertical lines that represent parts of time. The time must be uniform, so the diagram cannot monitor the months and then randomly start watching the years. If the cash flow scheme is to monitor the years, it will only display information based on flights and no other time measurement. There are two types of Arrows: the one that represents the tide or money comeseating into the project, and the one that represents a drain or money from the project. When the arrow refers to the cash flow diagram, it means an tide, while an arrow pointing to the line means drain.
The tide is any money that comes into the project. If there are any loans, it is considered an tide. Sale, if the project earns money, is considered an tide. The drain is when the money is spent or invested. Although money earns more money in the future, it is still considered an outflow.
In addition to costs, the cash flow diagram will usually display any money that can be recovered at the end of the project. If the project requires tools such as heavy machines, a diagram usually has an area that shows the value of the further sales of the device and displays it as an inflow. If there are any payment plans, such a loan or loan payment will be recorded immediatelyon a cash flow diagram. This allows managers to know where this money is going and that they cannot rely on this money for the project.
cash flow schemes are usually associated with other types of diagrams and leaves that monitor the total balance and sale or profits. They are used to help managers understand how much money is left and how much is spent. They also allow managers to know whether the project is making money or whether nothing is formed.