Mastering Cash Flow

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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 HOW DO WE MONITOR THE Purpose: HEALTH OF OUR CASH Bridges the Balance POSITION? Sheet and Income • LIQUIDITY RATIOS Statement • EFFICIENCY RATIOS Components: • CONSIDER ADDING DAYS (OR - Operating Activities MONTHS) OF CASH ON HAND TO THE BOTTOM OF YOUR CASH - Investing Activities FLOW - Financing Activities 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) 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) Investing and Financing Cash Flow from Financing Activities Activities (Generally long term area of focus) 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 ABC Brewing Cash Flow Statement For the 6 months ended November 30, 2020

ACTIVITIES 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 THAT 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 IMPACT 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 EACH Sale of Property & Equipment 0 0 0 0 0 0 Deposits on Kegs 0 0 0 0 0 0 SECTION 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) BEFORE/AFTER 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) REVIEW 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 Actions taken with Purchase of Property & Equipment 0 0 0 0 0 0 Sale of Property & Equipment 0 0 0 0 0 0 Accounts Receivable Deposits on Kegs 0 0 0 0 0 0 and Accounts Payable Net Cash From Investing Activities 0 0 0 0 0 0

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 Actions taken with Sale of Property & Equipment 0 0 0 0 0 0 Deposits on Kegs 0 0 0 0 0 0 Inventory 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 ABC Brewing Balance Sheet As of April 30, 2020 Review the Balance Sheet Regularly! Total ASSETS Current Assets Checking 41,669.69 MM Savings 18,256.08 Paypal 549.58 LIABILITIES AND EQUITY Total Bank Accounts $ 60,475.35 Accounts Receivable Liabilities Accounts Receivable (A/R) 47,713.76 Current Liabilities Total Accounts Receivable $ 47,713.76 Accounts Payable Other Current Assets Employee Cash Advances 1,728.00 Accounts Payable (A/P) 262,591.35 Inventory- Finished Goods Total Accounts Payable $ 262,591.35 Inventory- Finished Goods- Kegged 13,142.82 Credit Cards Inventory- Finished Goods- Packaged (Case/Bottle) 10,290.27 Total Inventory- Finished Goods $ 23,433.09 Capital One 11,238.99 Inventory- Merchandise 10,314.16 Total Credit Cards $ 11,238.99 Inventory- Packaging 56,465.81 Other Current Liabilities Inventory- Raw Materials 71,409.50 Inventory- WIP 9,859.11 Keg Deposits 6,876.00 Prepaid Insurance 10,958.55 Sales and Use Tax Payable 9,082.13 Prepaid Hop Contract 58,360.13 Total Other Current Liabilities $ 15,958.13 Undeposited Funds 3,028.21 Total Other Current Assets $ 353,745.67 Total Current Liabilities $ 289,788.47 Total Current Assets $ 461,934.78 Long-Term Liabilities Fixed Assets Note Payable 435,300.00 Accumulated Amortization -17,273.64 Accumulated Depreciation -180,822.23 Total Notes Payable $ 435,300.00 Furniture & Fixtures 42,455.76 Total Long-Term Liabilities $ 435,300.00 Leasehold Improvements 342,101.32 Total Liabilities $ 725,088.47 Organizational Cost 29,203.82 Production Equipment 311,283.34 Equity Restaurant Equipment 139,586.69 Member's Equity Startup Costs 152,576.11 Total Member's Equity $ 154,731.39 Vehicles 96,928.31 Total Fixed Assets $ 916,039.48 Retained Earnings 470,278.41 Other Assets Net Income 37,190.87 Security Deposits 7,300.00 Total Equity $ 662,200.67 Total Other Assets $ 7,300.00 TOTAL ASSETS $ 1,385,274.26 TOTAL LIABILITIES AND EQUITY $ 1,387,289.14 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 Short-Term Long-Term Forecasting Best Forecasting Best And Don’t Practices Practices Forget… Understand your fixed Align overhead spend with Be sure to use divisional overhead future demand accounting to track profitability by each arm of the brewery Manage inventory, A/R, A/P Review contracts Periodically review your COA Use your tech Eliminate, automate, consolidate Review POS entry as it relates Focus on generating to the accounts in your COA working capital Evaluate all capital projects Culture using cash flows via NPV analysis Holistic view of the enterprise Minimize pricing erosion Cash Flow Cash Flow Statement Forecast

Historical View Future Plan of Sources and of How Cash Uses of Cash Moved Summary Sheet AR Detail AP Detail OpEx Detail Investing & Financing Detail Q&A --- MASTERING CASH FLOW AUDRA GAIZIUNAS - MARIA PEARMAN, CPA