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Global Cash Flow Model
A variation of the cash model called Global Cash Flow integrates personal and corporate activities to provide a more complete picture as many companies (particularly S-Corporations) and their owners' activities are intertwined.
The first column provides a simple model of global cash flow. The first section shows business activity; the second shows the individual's cash flow and debt service. The two are then combined to provide global cash flow. This model was provided by Southern Commerce Bank, Tampa, FL.
Simple Global Cash Flow
BUSINESS
Net Income/(Loss)
- Non-deductible Expenses
+ Investment Income
+ Depreciation/Amortization
+ Interest Expense
Net Cash Available for D/S
Debt Service - Interest Expense
Debt Service - CMLTD
Debt Service - Other
Total Business Debt Service
Cash Flow Surplus/(Deficit)
DSCR
INDIVIDUAL
Salary/Wages
+ Interest/Dividends
+ Other Income
- Federal Taxes
- Other Taxes
- Living Expenses ($2M/month)
Net Cash Available for D/S
Mortgage - Term Debt
Debt Service
Debt Service
Total Personal Debt Service
Cash Flow Surplus/(Deficit)
DSCR
GLOBAL CASH FLOW
Net Cash - Business
Net Cash - Personal
Total Net Cash Available for D/S
D/S - Business
D/S - Personal
Total Debt Service
Global Surplus/(Deficit)
Global DSCR
Note: It is important to understand the various investments and their relevant importance to the guarantor.
The guarantor may have only a passing interest in an investment. It may be a money loser and negatively impacting the calculated global cash flow. However, the guarantor/investor may not put any additional funds into the investment. Advanced analysts understand the importance of each investment to the guarantor.
Global Cash Flow
Global Cash Flow is used to determine the impact of a guarantor's personal activities and other business relationships on cash flow.
To evaluate the impact on Global Cash Flow, a determination of ownership interests in S- Corps, C-Corps, Partnerships and Limited Liability Companies (LLCs) must be determined.
It is important to include all the owner's business activities, personal activities, debt and other financial obligations, and liquidity. This information should be obtained from personal and business tax returns and all supporting financial information.
Business
S- Corp - Ownership is a pass through entity to 1040
Form 1120S - Partnerships
Net Income (Loss)
Depreciation
Interest Expense
Schedule K-1, M-1
and other adjustments
Summary of balance sheet changes
C-Corp - Does not pass through to 1040
Form 1120
(C- Corp)
Shareholder Loans
Capital Investment
Contingent Liabilities
Personal
1040
Wages/salaries
Tips
Interest income
Dividends
Alimony Received
IRA distributions
Pension payments
Social Security
Schedule C
Proprietorships - Net
Income (loss)
Depreciation
Interest Expense
Nondeductible meals
Entertainment expenses
Other B/S changes
Schedule D
Capital Gains (Loss)
from Sales of Assets
Schedule E
Rents
Royalties
Depreciation
Interest Expense
Inc from Trusts or Estates
Sometimes the customer has
so many pass through entities that they won't fit on page 2. Look for Supplemental Schedules
Partnership, S-Corp, multiple member LLCs choosing partnership taxation
Schedule F
Farm Net Income/(Loss)
Depreciation
Interest Expense
Personal Balance
Sheet Changes
Adjustments for Taxes and Living Expenses
1040
Total federal tax (including self-employed)
W-2 or Estimated FICA tax (6.2% of wages/salaries)
Medicare tax (1.45% of wages/salaries)
Schedule A
State and Local Income Taxes
Estimate for Personal Living Expenses
Other Income - Alimony
Other Income - Child Support