TOOL E12
| Operational Cash Drivers → Operational Cash Flow | |
| P | Revenues and profitability |
| A | Asset management |
| C | Asset management |
| Financial Cash Drivers → Financial Charges | |
| E | Leverage and debt capacity |
| D | Leverage and debt capacity |
| Key Drivers | Primary Ratios | Secondary Ratios | |
|---|---|---|---|
| REVENUES AND PROFITABILITY | Volume of sales Sales Price Operating Margins Tax | Sales Growth EBIT Margin ICR = EBIT ——————- Interest Expense | Gross Profit EBITDA Margin |
| ASSET MANAGEMENT | Volume of sales Time Pricing | Net Working Assets ——————- Sales | Days payable Days inventory Days receivable |
| Mandatory Capex Time delay Cost overruns Completion risk Impact on volumes & margins Discretionary Capex Impact on acquisitions/ disposals | Physical Assets Utilization | Gross Capex (PPE) ——————- Depreciation | |
| LEVERAGE AND DEBT CAPACITY | Access to Capital Cost of equity – dividend policy* | Net Worth —————- Total Assets ** | Quick Ratio Current Ratio Tangible Net worth —————- Total Assets** |
Cost of debt – interest * Debt maturity profile * Cash financial FX losses * Access to debt markets Contingent liabilities *financial charges **these ratios may need to be adjusted for off balance sheet and other liabilities | Operating cash flow —————- Debt ** Debt ** —————- EBITDAR | Debt/ (T) Net Worth | |
| DSCR | Measure of Cash flow —————— Finance Charges Measure of Cash flow —————— Interest | Measures of Cash flow —————– Debt | |
Note:
Consider the impact of key business risks on operational cash drivers.
Consider protection afforded by natural mitigants.
Consider the impact of key business risk on access/cost of equity and debt
Definition of cash flow measure is key
