Mg 4001 Financial Management

Financial Planning Paper

Rosalie R King

Ohio Christian University

MG 4001 Financial Management

Dr. Valdiserri

March 4, 2013

Cash flows are very important to the survival of any business. As managers we must forecast what is going to happen to the cash flow of King's Automotive to ensure that the business has enough money to survive. We have to make sure that we are able to identify where we are losing money and how we can prevent losing money ahead of time. We must make sure that we are able to pay for the supplies that are needed to keep our business running and that we are able to pay our employees on time. By us preparing a well-organized forecast we will also be able to monitor how quickly our customers are paying their debts back to us (Riley, 2009).

When identifying our cash flow we must consider where we are in need of other financing such as overdraft protection or if a loan is needed, what level of loan payments we can afford, if we are able to take on new employees or what money we have available for marketing, how much we are able to pay our employees and our selves, and what problems could occur during operation. The difference between earnings and cash flow is our earnings is the income that we earn that results in cash earnings and our cash flow is what is left over from the cash that we generate from our operations, minus our capital ("Business information factsheet," ).

We must be accurate when we determine and forecast our cash flow, as managers we must be able to reduce the amount of error we observe of our forecasted values and our actual values. We are all human and even though in a perfect world we think that we can forecast our financial transaction completely accurate, but we cannot. This is why we must prepare for the unpredictable or for the things that are out of our control. Sales forecasts are scandalously unpredictable, and being able to predict our actual sales is measured by factors that are beyond our control. As manager we must always prepare ourselves for anything that might come our way. A good manager is one who is always prepared and ready for anything. They must also train their employees to be prepared as well ("Source of uncertainty," 2008).

We all know that earnings are something that is very easily falsified and we must be care when preparing these statements to not falsify our earnings, because it will affect us in the long run. Also we know that cash flow is something that cannot be easily falsified because it can be seen but what we have in the bank. Like anything that has to do with finances we must be extremely care when we are documenting and reporting them.

I have put together our cash flow