![Vanilla interest rate swap with bank](https://upload.wikimedia.org/wikipedia/commons/8/81/Vanilla_interest_rate_swap_with_bank.png)
A cash-flow diagram is a
financial tool used to represent the
cashflows associated with a
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,
"project", or business.
As per the graphics, cash flow diagrams are widely used in structuring and analyzing securities, particularly
swaps.
They may also be used to represent payment schedules for
bonds,
mortgages
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...
and other types of loans.
In the context of business, and
engineering economics
''For the application of engineering economics in the practice of civil engineering see Engineering economics (Civil Engineering).''
Engineering economics, previously known as engineering economy, is a subset of economics concerned with the us ...
,
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these are used by management accountant
In management accounting or managerial accounting, managers use accounting information in decision-making and to assist in the management and performance of their control functions.
Definition
One simple definition of management accounting is th ...
s and engineer
Engineers, as practitioners of engineering, are professionals who invent, design, analyze, build and test machines, complex systems, structures, gadgets and materials to fulfill functional objectives and requirements while considering the limit ...
s, to represent the cash-transactions which will take place over the course of a given project.
Transactions can include initial investments, maintenance
Maintenance may refer to:
Biological science
* Maintenance of an organism
* Maintenance respiration
Non-technical maintenance
* Alimony, also called ''maintenance'' in British English
* Champerty and maintenance, two related legal doct ...
costs, projected earnings or savings resulting from the project, as well as salvage and resale value of equipment at the end of the project.
These diagrams - and the associated modelling - are then used to determine a break-even point
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". There is no net loss or gain, and one has "broken even", though opportunity costs ...
( "cash flow neutrality"),
or to further, and more generally, analyze operations and profitability.
See cashflow forecast
Cash flow forecasting is the process of obtaining an estimate or forecast of a company's future financial position; the cash flow forecast is typically based on anticipated payments and receivables.
See Financial forecast for general discussion ...
and operating cash flow.
References
Business economics
Cash flow
Management cybernetics
Swaps (finance)
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