Feb Case Analysis 4

8-34.
Toward the beginning of this case, the following statement appears:

“Almost all small businesses experience cash flow shortfalls.” What is cash
flow? Why is cash flow so critical to an entrepreneurial firm’s success? Why
do almost all small businesses experience cash flow shortfalls?
Cash flow is an amount of money, cash that is transferred in and out of a
company or a business. It is movement of cash in particular period. also, it
shows how much money is available in the end of particular period.
Often there are shortage of cash in entrepreneurial firms. Most of the firms sell
their products or services with future benefits, with consignations so because
of that there is not enough cash to cover their current expenses or future cost
of goods/services. So, importance of cash flow is to control movement of cash
and to understand your financial abilities to continue business running. There
are two kind of cash flows, positive and negative. Positive cash flow means
that you have more money then was spent so your firm can operate. If the
cash flow is negative it gives you worrying that there is not enough money so
company need to cut their expenses.
The most of all small businesses sell their products or services and get their
profit, money back after particular period, especially business-to-business
companies. So, because of this most of small businesses have negative cash
flows, cash flows shortfalls. Often, they skip serious financial statements steps
and analyze anecdotal data and make decisions based on that, so because of
that they have a cash flow shortfall and they are forced to pay a big price for
incorrect decisions.
8-35. As explained in this chapter, a firm’s statement of cash flows is divided

into three separate activities. Which of the activities from the statement of
cash flows would be affected by a firm’s decision to use Fundbox’s service?
What are some of the potential effects of a small entrepreneurial firm’s
decision to use Fundbox on the components of that firm’s statement of cash
flows?
Fundbox’s services directly effect on businesses’ financial activities. Making
decision to use Fundbox’s services improve company’s liquidity. It will
increase companies cash balance (available cash to reuse or to invest in
producing or serving in future)
8-36. If Fundbox’s co-founders (yuval Ariav, Eyal Shinar, and Tomer Michael)
were to ask your advice about the importance of pro forma statements to their
firm’s continuing success, what would you say to them? What pro forma
statements would you recommend the co-founders develop and why?
Pro forma financial statement likes prediction of companies’ future financial
abilities. It likes planning future budget of firms. So, to understand firm’s future
cash flows, and budget it is important to make Fundbox’s pro forma
statement. I would recommend them to make and develop pro forms of cash
flow and income, because their main resource is cash, so they need to
estimate future amount of cash that they can use and borrow to other
companies. Also, every company should calculate their incomes and
expenses beforehand to understand how their company can be developed.
8-37. As a young entrepreneur, what lessons about the financial management

of a firm can you learn from the actions taken by the three cofounders of
Fundbox?
One of the lessons we have learnt as a young entrepreneur is about
importance of cash flow, especially for a small business. We should always
control cash that our company has and needs to continue operating. Another
important lesion that we have learnt is about importance of developing pro
forms. For minimizing risks planning future budget, cash flows, incomes and
outcomes are very important issue. Pro forms outlines the future of the
company and how, in which way it can be developed and what challenges it
can face with. So, it another time shows us importance of planning,
organizing and controlling and in financial part of management.
Mariami Ketiladze
Nika Kalandadze
Konstantine Gagnidze
Giorgi Gotsadze
Gvantsa Chikovani

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8-34.

Toward the beginning of this case, the following statement appears:

8-35. As explained in this chapter, a firm’s statement of cash flows is divided

8-37. As a young entrepreneur, what lessons about the financial management

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