MASTERING CASH FLOW

AUDRA GAIZIUNAS - MARIA PEARMAN, CPA

MARIA PEARMAN, CPA

Author, Small Brewery Finance

PERKINS & CO, PC

AUDRA GAIZIUNAS

FRACTIONAL CEO, CFO

BREWED FOR HER LEDGER, LLC

BA FINANCE COMMITTEE

BHRAMARI BREWING COMPANY

AGENDA

• Cash Flow Statement Overview

• Cash Flow in Detail

• Building a Forecast

• Q+A

• Cash Flow Statement

Purpose: Bridges the Balance Sheet and Income Statement

Components:- Operating Activities- Investing Activities- Financing Activities

• LIQUIDITY RATIOS

• EFFICIENCY RATIOS

• CONSIDER ADDING DAYS (OR MONTHS) OF CASH ON HAND TO THE BOTTOM OF YOUR CASH FLOW

HOW DO WE MONITOR THE HEALTH OF OUR CASH POSITION?

CASH FLOW RULES

Cash income -> Cash inflow

Cash loss -> Cash outflow

Asset increase -> Cash outflow

Asset decrease -> Cash inflow

Liability increase -> Cash inflow

Liability decrease -> Cash outflow

Equity increase -> Cash inflow

Equity decrease -> Cash outflow

Operating Activities (Generally short term area of focus)

Investing and Financing Activities (Generally long term area of focus)

Month 1

Net Cash Generated By Operating Activities 133,000

Cash Flow from Investing Activities

Purchase of Property & Equipment (72,000)

Sale of Property & Equipment 6,000

Purchase of Land 0

Net Cash From Investing Activities (66,000)

Cash Flow from Financing Activities

Line of Credit Borrowing 0

Payment of Dividends 0

Long Term Liability Repay (Principal) (4,830)

Net Cash From Financing Activities (4,830)

NET CASH FLOW 62,170

Beginning Cash 176,453

Ending Cash 238,623

Months of Cash 5

ACTIVITIES THAT

IMPACT EACH

SECTION---

BEFORE/AFTER

REVIEW

ABC Brewing

Cash Flow Statement

For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Cash Flow From Operations

Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)

Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477

Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069

(Increases)/Decreases in Accounts Receivable 0 0 0 0 0 0

(Additions)/Depletions of Inventory 0 0 0 0 0 0

Increases/(Decreases) in Accounts Payable 0 0 0 0 0 0

Net Cash From Operating Activities (12,793) (12,185) (11,695) (12,185) (12,185) (10,225)

Cash Flow from Investing Activities

Purchase of Property & Equipment 0 0 0 0 0 0

Sale of Property & Equipment 0 0 0 0 0 0

Deposits on Kegs 0 0 0 0 0 0

Net Cash From Investing Activities 0 0 0 0 0 0

Cash Flow from Financing Activities

Line of Credit Borrowing 0 0 0 0 0 0

Dividends 0 0 0 0 0 0

New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0

Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

NET CASH FLOW (17,623) (17,035) (16,565) (17,076) (17,096) (15,157)

Beginning Cash 37,645 20,022 2,987 (13,578) (30,654) (47,750)

Ending Cash 20,022 2,987 (13,578) (30,654) (47,750) (62,907)

Months of Cash 0 0 0 -1 -1 -1

ABC Brewing

Cash Flow Statement

For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Cash Flow From Operations

Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)

Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477

Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069

(Increases)/Decreases in Accounts Receivable 0 24,100 500 2,200 0 0

(Additions)/Depletions of Inventory 0 0 0 0 0 0

Increases/(Decreases) in Accounts Payable 11,650 22,300 0 0 0 0

Net Cash From Operating Activities (1,143) 34,215 (11,195) (9,985) (12,185) (10,225)

Cash Flow from Investing Activities

Purchase of Property & Equipment 0 0 0 0 0 0

Sale of Property & Equipment 0 0 0 0 0 0

Deposits on Kegs 0 0 0 0 0 0

Net Cash From Investing Activities 0 0 0 0 0 0

Cash Flow from Financing Activities

Line of Credit Borrowing 0 0 0 0 0 0

Dividends 0 0 0 0 0 0

New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0

Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

NET CASH FLOW (5,973) 29,365 (16,065) (14,876) (17,096) (15,157)

Beginning Cash 37,645 31,672 61,037 44,972 30,096 13,000

Ending Cash 31,672 61,037 44,972 30,096 13,000 (2,157)

Months of Cash 1 1 1 1 0 0

Actions taken with Accounts Receivable and Accounts Payable

ABC Brewing

Cash Flow Statement

For the 6 months ended November 30, 2020

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Cash Flow From Operations

Net Income (17,440) (16,812) (16,302) (16,772) (16,752) (14,771)

Depreciation & Amortization 3,477 3,477 3,477 3,477 3,477 3,477

Interest Expense 1,170 1,150 1,130 1,109 1,089 1,069

(Increases)/Decreases in Accounts Receivable 0 24,100 500 2,200 0 0

(Additions)/Depletions of Inventory 5,200 4,400 1,600 0 0 600

Increases/(Decreases) in Accounts Payable 11,650 22,300 0 0 0 0

Net Cash From Operating Activities 4,057 38,615 (9,595) (9,985) (12,185) (9,625)

Cash Flow from Investing Activities

Purchase of Property & Equipment 0 0 0 0 0 0

Sale of Property & Equipment 0 0 0 0 0 0

Deposits on Kegs 0 0 0 0 0 0

Net Cash From Investing Activities 0 0 0 0 0 0

Cash Flow from Financing Activities

Line of Credit Borrowing 0 0 0 0 0 0

Dividends 0 0 0 0 0 0

New Current Borrowing - Additional Loan or Equity 0 0 0 0 0 0

Long Term Liability Repay (Principal Only) (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

Net Cash From Financing Activities (4,830) (4,850) (4,870) (4,891) (4,911) (4,931)

NET CASH FLOW (773) 33,765 (14,465) (14,876) (17,096) (14,557)

Beginning Cash 37,645 36,872 70,637 56,172 41,296 24,200

Ending Cash 36,872 70,637 56,172 41,296 24,200 9,643

Months of Cash 1 2 1 1 1 0

Actions taken with Inventory

LIABILITIES AND EQUITY

Liabilities

Current Liabilities

Accounts Payable

Accounts Payable (A/P) 262,591.35

Total Accounts Payable $ 262,591.35

Credit Cards

Capital One 11,238.99

Total Credit Cards $ 11,238.99

Other Current Liabilities

Keg Deposits 6,876.00

Sales and Use Tax Payable 9,082.13

Total Other Current Liabilities $ 15,958.13

Total Current Liabilities $ 289,788.47

Long-Term Liabilities

Note Payable 435,300.00

Total Notes Payable $ 435,300.00

Total Long-Term Liabilities $ 435,300.00

Total Liabilities $ 725,088.47

Equity

Member's Equity

Total Member's Equity $ 154,731.39

Retained Earnings 470,278.41

Net Income 37,190.87

Total Equity $ 662,200.67

TOTAL LIABILITIES AND EQUITY $ 1,387,289.14

Total

ASSETS

Current Assets

Checking 41,669.69

MM Savings 18,256.08

Paypal 549.58

Total Bank Accounts $ 60,475.35

Accounts Receivable

Accounts Receivable (A/R) 47,713.76

Total Accounts Receivable $ 47,713.76

Other Current Assets

Employee Cash Advances 1,728.00

Inventory- Finished Goods

Inventory- Finished Goods- Kegged 13,142.82

Inventory- Finished Goods- Packaged (Case/Bottle) 10,290.27

Total Inventory- Finished Goods $ 23,433.09

Inventory- Merchandise 10,314.16

Inventory- Packaging 56,465.81

Inventory- Raw Materials 71,409.50

Inventory- WIP 9,859.11

Prepaid Insurance 10,958.55

Prepaid Hop Contract 58,360.13

Undeposited Funds 3,028.21

Total Other Current Assets $ 353,745.67

Total Current Assets $ 461,934.78

Fixed Assets

Accumulated Amortization -17,273.64

Accumulated Depreciation -180,822.23

Furniture & Fixtures 42,455.76

Leasehold Improvements 342,101.32

Organizational Cost 29,203.82

Production Equipment 311,283.34

Restaurant Equipment 139,586.69

Startup Costs 152,576.11

Vehicles 96,928.31

Total Fixed Assets $ 916,039.48

Other Assets

Security Deposits 7,300.00

Total Other Assets $ 7,300.00

TOTAL ASSETS $ 1,385,274.26

ABC Brewing

Balance SheetAs of April 30, 2020

Review the Balance Sheet Regularly!

SHORT TERM ACTIVITIES LEAD TO LONG TERM DECISIONS

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Flow From Operations

Net Income $12,106 $14,462 $15,959 $15,477 $14,486 $12,418 $13,356 $13,364 $12,539 $12,548 $13,389 $5,398

Depreciation & Amortization $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999 $4,999

Interest Expense $7,121 $7,113 $7,105 $7,097 $7,089 $7,081 $7,073 $7,064 $7,056 $7,048 $7,039 $7,031

(Additions)/Depletions of Inventory $0 $0 $3,412 $1,444 $306 $414 $2,022 $0 $514 $0 $0 $1,743

Net Cash From Operating Activities $24,226 $26,573 $24,650 $26,128 $26,879 $24,911 $23,405 $25,427 $24,080 $24,594 $25,427 $15,684

Cash Flow from Investing Activities

Purchase of Property & Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885

Purchase of Distribution Vehicles $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Deposits on Kegs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Cash From Investing Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $216,885

Cash Flow from Financing Activities

Line of Credit Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long Term Liability Repay $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346

Net Cash From Financing Activities $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346 $8,346

NET CASH FLOW $15,879 $18,227 $16,304 $17,782 $18,533 $16,565 $15,059 $17,081 $15,734 $16,248 $17,081 $209,547

Beginning Cash $175,541 $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032

Ending Cash $191,420 $209,647 $225,951 $243,733 $262,266 $278,830 $293,889 $310,970 $326,704 $342,951 $360,032 $150,485

Months of Cash 5.3 6.1 6.8 7.3 7.6 7.7 8.2 8.7 9.0 9.4 10.1 3.4

Understand your fixed overhead

Manage inventory, A/R, A/P

Use your tech

Focus on generating working capital

Align overhead spend with future demand

Review contracts

Eliminate, automate, consolidate

Evaluate all capital projects using cash flows via NPV analysis

Minimize pricing erosion

Be sure to use divisional accounting to track profitability by each arm of the brewery

Periodically review your COA

Review POS entry as it relates to the accounts in your COA

Culture

Holistic view of the enterprise

Short-Term Forecasting Best Practices

Long-Term Forecasting Best Practices

And Don’t Forget…

Cash Flow Statement

Historical View of How Cash

Moved

Cash Flow Forecast

Future Plan of Sources and Uses of Cash

Summary Sheet

AR Detail

AP Detail

OpEx Detail

Investing &

Financing Detail

Q&A---

MASTERING CASH FLOW

AUDRA GAIZIUNAS - MARIA PEARMAN, CPA