What are the basics of cash flow management?

Answer 1

When a firm or company apply for a term loan (like machinery loan etc.), the banker insist for submission of cashflow statements from the applicant to asses the viability of the loan.
In the cashflow statements, the applicant gives details of projected monthly income (monthwise for a period upto which the proposed loan will be repaid completely) and the expected generation of the income (monthwise) after the disbursement of the loan (taking into the account income generated by the new machinery). He is expected to show how the repayment of the loan and quarterly/monthly interest will be met from the receipts of the income. This cashflow statements give the banker to asess the need of term loan and he appraise the loan accordingly.