chapter 4 net income and cashflow /en

basic thinking

Before we start to develop the logic for a cashflow or netincome corporate planning solution. We need to understand the basic economic rules that underlay this issue.

In the corporate world there are two worlds of watching a company. The “dreamy profit and loss view, where people think that money and cash flows directly (no time between writing an invoice and recieving the money) and the “realcashflow taking care about time delays for spending and revieving money in a company.

To build a solution in a database, taking care about those two worlds – we have to define a flag or sign, in which world each single value belongs. This means we build 5 types of values:

  1. NEUTRAL – Helper Fields, to build logics like amount * price = revenues -> so price is a helper field!
  2. TAX IN – Those Fields really contain an amount, that is a relevant profit and loss amount (e.g. revenues)
  3. TAX OUT – Fields like goods needed to build a product
  4. CASH IN – real payables calculated on the balance accounts-recievable
  5. CASH OUT – real payables calculated on the balance accounts-payable

Having those flags integrated, we have the possibility to sum up all TAX IN and TAX OUT, then build the saldation TI – TO = NI and we’ll become the NetIncome for a individual subset of the data.

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