Chapter 14, Problem 1DQ

What are the five steps for developing a cash flow for a construction company?

To determine

Identify the five steps to develop the construction company cash flow.

Explanation of Solution

The five steps to develop the construction company cash flow are:

• The construction costs, project revenues, cash receipts and disbursements for every project is combined to get the cash flow for the company.
• The cash disbursement for general overhead is determined by combining overhead cash flow with cash flow from projects to get cash flow from operations.
• Incorporate the other expenses and revenues.
• The minimum cash balance for companies receiving revenue at the month end.
• Perform the sensitive analysis, check what if scenarios and determine the changes in the company’s need with the changes in input parameters.