THE CASH FLOW STATEMENT

INFLOW 3,000,000 >>>

100,000 OPENING BALANCE CASH AND CASH EQUIVALENTS OUTFLOW >>>> 2,700,000

CLOSING BALANCE OF CCE = 400,000 CLOSING BALANCE OF CCE = ( 3,000,000 - 2,700,000) + 100,000 CLOSING BALANCE OF CCE = ( CASH INFLOW - CASH OUTFLOW) + OPENING BALANCE THREE TYPES OF CASH FLOWS : 1 CASH FLOWS FROM OPERATING ACTIVITY :

SALES COLLECTION PAYMENT OF EXPENSES DAY TO DAY TRANSACTIONS

2 CASH FLOW FROM INVESTING ACTIVITY

SALE OF OLD FIXED ASSETS PURCHASE OF NEW ASSETS SALE / PURCHASE OF INVESTMENT INVESTMENT INCOME LONG TERM CASH FLOWS LOANS TAKEN OR REPAID SHARES ISSUED INTEREST PAID DIVIDENDS PAID

3 CASH FLOW FROM FINANCING ACTIVITY

RISK ANALYSIS
DEFN : DANGER WITH OPPORTUNITY (WEI QI) UNCERTAINTY OR VOLATILITY OF OUTCOME THE CHANCE OF A NEGATIVE EVENT IN BUSINESS

FINANCIAL MANAGEMENT OF RISK INVOLVES THE FOLLOWING STAGES :

1 CONTEXTUALISE THE RISK DEFINE THE PARAMETERS FOR RISK ANALYSIS IS IT INTERNAL OR EXTERNAL RISK IS IT OPERATING OR FINANCIAL RISK, ETC. WHAT ARE THE RISK EVENTS THAT CAN

2 DEFINE THE RISK

IMPACT A CERTAIN BUSINESS 3 MEASURE THE RISK USING METHODS SUCH AS : SENSITIVITY ANALYSIS STANDARD DEVIATION PROBABILITIES ETC

4 MANAGE THE RISK

'AVOID' STRATEGIES TRANSFER THE RISK } DIRECT SHARING OF THE RISK EG INDIRECT SHARING - INSURANCE ELIMINATE THE RISK IF POSSIBLE MONITOR AND RESPOND BALANCE OF RISK

5 DOCUMENT THE RISK

REFERENCE FOR FUTURE RISK MANAGEMENT STRA

TYPES OF RISK
MARKET RISK = SYSTEMATIC RISK BUSINESS RISK = OPERATIONS RISK FINANCIAL RISK = RISK IN FINANCIAL MARKETS MBR = MARKET BUSINESS RISK MFR = MARKET FINANCIAL RISK

INDIVIDUAL RISK = UNIQUE RISK = NON SYSTEMATIC RISK BUSINESS RISK = OPERATIONS RISK FINANCIAL RISK = LEVEL AND NATURE OF BORROWINGS BY THE COMPANY IBR = INDIVIDUAL BUSINESS RISK IFR = INDIVIDUAL FINANCIAL RIS MARKET BUSINESS RISK DRIVERS OR FACTORS 1 2 3 4 5 6 7 8 9 10 MBR

RECESSION GENERAL FALL IN PURCHASING POWER EG. GREECE INFLATION = INCREASING PRICES ENVIRONMENTAL CHANGES INCREASE IN COSTS OF PRODUCTION POLTICAL INSTABILITY EPIDEMIC CHANGES IN REGULATORY FRAMEWORK EG TAX NATURAL DISASTERS CHANGES IN LIFESTYLE

MARKET FINANCIAL RISK FACTORS MFR 1 INTEREST RATES 2 CURRENCY VALUE FLUCTUATIONS 3 FLUCTUATING VALUE OF FINANCIAL ASSETS, DERIVATIVES ETC. 4 CHANGES IN RESERVE REQUIREMENTS AND CREDIT POLICY OF BANKS 5 CHANGES IN BOND YIELDS

INDIVIDUAL BUSINESS RISK FACTORS IBR 1 CASH FLOW PROBLEMS CAUSED BY POOR COLLECTION 2 LACK OF REQUIRED SUPPLY OF MATERIALS 3 LABOUR SHORTAGE 4 FALL IN DEMAND 5 NEW COMPETITION 6 DIFFICULT TO GET CREDIT FROM SUPPLIERS 7 LINE PRODUCTION PROBLEMS 8 PRODUCT FAILURES AND LEGAL ACTION 9 CASH BUFFER PROBLEM 10 DATA LOSS 11 DAMAGE TO IMAGE 12 MANAGEMENT CONFLICT 13 LABOUR TENSIONS

INDIVIDUAL FINANCIAL RISK FACTORS IFR IMPACT COMPANIES WITH BORRO 1 LIQUIDITY AND CASH FLOW 2 LEVEL OF BORROWING 3 COST OF BORROWING 4 DEFAULT RATE OF DEBTORS 5 OPERATING FIXED COSTS HAVE A HIGHER IMPACT ON GEARED COMPANIES

RISK MEASURES
STANDARD DEVIATION VARIABILITY FROM AVERAGE OR MEAN OUTCOME IN BUSINESS, USUALLY USED WITH PROBABILITIES EXAMPLE : A BUSINESS HAS PREPARED THE FOLLOWING FORECAST OF ITS EARNINGS. SCENARIOS BOOM NORMAL RECESSION EARNINGS 35% 9,889 45% 8,888 20% 6,565 EXPECTED VALUE OF AVERAGE EARNINGS PROB.

STANDARD DEVIATION WITH PROBABILITIES : SD = SQUARE ROOT OF THE SUM OF (DEVIATIONS FROM THE MEAN^2 X RELATED PROBABILITY DEVIATIONS FROM THE MEAN D ^2 PROB BOOM 9889 - 8774 = 1115 1,243,225 35% NORMAL 8888 - 8774 = 114 12,996 45% RECESSION 6565 - 8774 = - 2209 4,879,681 20% VARIANCE = THEREFORE, STANDARD DEVIATION = SQ RT OF VARIANCE =

EXPECTED VALUE OF EARNINGS WILL BE RM 8,774 + / - 1190

OPENING BALANCE

SH OUTFLOW) + OPENING BALANCE

SALES COLLECTION PAYMENT OF EXPENSES DAY TO DAY TRANSACTIONS SALE OF OLD FIXED ASSETS PURCHASE OF NEW ASSETS SALE / PURCHASE OF INVESTMENTS INVESTMENT INCOME LONG TERM CASH FLOWS LOANS TAKEN OR REPAID SHARES ISSUED INTEREST PAID DIVIDENDS PAID

LLOWING STAGES :

E PARAMETERS FOR RISK ANALYSIS NAL OR EXTERNAL RISK ATING OR FINANCIAL RISK, ETC.

THE RISK EVENTS THAT CAN

CERTAIN BUSINESS

THODS SUCH AS : SENSITIVITY ANALYSIS STANDARD DEVIATION PROBABILITIES ETC

DIRECT SHARING OF THE RISK EG. JV INDIRECT SHARING - INSURANCE THE RISK IF POSSIBLE AND RESPOND BALANCE OF RISK FOR FUTURE RISK MANAGEMENT STRATEGY

MBR = MARKET BUSINESS RISK MFR = MARKET FINANCIAL RISK

WINGS BY THE COMPANY IBR = INDIVIDUAL BUSINESS RISK IFR = INDIVIDUAL FINANCIAL RISK

POLICY OF BANKS

IMPACT COMPANIES WITH BORROWINGS

ON GEARED COMPANIES

F ITS EARNINGS. EXPECTED VALUES (EV) 3,461 4,000 1,313 8,774 = MEAN

THE MEAN^2 X RELATED PROBABILITY) SD VALUES 435,129 5,848 975,936 1,416,913 1,190