(BQ) Part 2 book "Construction accounting and financial management" has contents: Cash flows for construction projects, projecting income taxes, time value of money, financing a company’s financial needs, tools for making financial decisions, income taxes and financial decisions,.and other contents. | PART IV Managing Cash Flows In this section we look at how to manage the company’s cash flows and how to evaluate different sources of funding its cash needs. This section includes the following chapters: ❑ ❑ ❑ ❑ ❑ Chapter 12: Cash Flows for Construction Projects Chapter 13: Projecting Income Taxes Chapter 14: Cash Flows for Construction Companies Chapter 15: Time Value of Money Chapter 16: Finaning a Company’s Financial Needs 257 This page intentionally left blank CHAPTER 12 Cash Flows for Construction Projects In this chapter you learn to develop a cash-flow projection for a construction project from both the perspective of a construction company that is receiving progress payments or draws from the project’s owner and from the perspective of a construction company that receives a single payment when the project is sold—such as is the case with many homebuilders. For companies in either of these situations, the company must pay for some or all of the construction costs—especially labor—from the company’s funds before being reimbursed for these costs. To cover these costs the company needs cash. Because inadequate funding on the part of the construction company can spell doom to a construction project as well as to all of the companies involved, it is important that managers accurately project both the amount and timing of the cash required by a construction project. An understanding of the cash flow for a construction project is a prerequisite to preparing a cash flow for an entire construction company, which is discussed in Chapter 14. There are two primary threats to a construction company’s financial future. The first threat is a lack of profitability. The second threat is insufficient cash. Insufficient cash is where the company lacks sufficient funds to pay the bills that are due. A company may be profitable and still fail because it lacks sufficient cash. In this chapter we look at the cash needed to construct individual projects. The cash .
