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Spotlight on Cards:  3 cards that show you the cash shortage

CashFlowTool shows over 30 business metrics enabling you to have a quick pulse on your business.  These metrics appear in the dashboard feature where you can customize dashboards to meet your specific needs.   This month, we spotlight 3 cards that help you understand a cash shortage.

No business ever wants to have a cash shortage and yet there may come a time that it is unavoidable.   CashFlowTool has 3 important cards that help you understand what your cash shortage is, should you have one.

Cash Shortage Defined
To see and understand a potential cash shortage, you use these 3 cards:

Cash Shortage Cards 2

To calculate the cash shortage, you simply subtract the card "Average cash needed to close the cash gap" from Working capital.  In this case, Working capital ($530,000) minus Average cash needed to close the cash gap ($916,572) equals Cash shortage (-$386,572).

 

Here are the details of the calculations for each card:

Working capital

Measures how much money you have to operate your business.
working capital card
07 - Working capital
WorkingCapital formula

 

 

Average cash needed to close the cash gap

The amount needed for the business to close the cash gap based on average daily expenses as of the previous month end
average cash needed to close the cash gap
05 - Average cash needed to close the cash gap
average cash needed to close the cash gap

 

 

Cash Shortage

Measures if you have enough money to sustain operations during your working capital cycle.
cash shortage card
06 - Cash shortage
CashShortage formula

 

 

So there you have it!  Next month we will explore more cards and if you have any specific requests, let us know.

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About CashFlowTool.com

CashFlowTool is a product developed by Finagraph. We're a technology company that's passionate about helping small business owners, accountants, and lenders deeply understand the financial health of companies. Finagraph’s trusted technology helps power services provided by companies including Moody’s Analytics, Jack Henry & Associates and leading banks. Learn more


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