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 

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