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High interest rates can affect global cash flow with banks charging higher financing costs. This will lower external finance demand as institutions concentrate on small debt servicing instead of financing larger projects. There will be less capital for entrepreneurs. The result would be a general slow-down of the economy.

Entrepreneurs depend on liquidity of the money supply. Global cash flow analysis of their loans may reveal weaknesses in debt coverage or the comingling of the same resources to simultaneously support different debt demands. Loan officers must give careful study to the debtor's global cash flow inflows.

Discretionary cash flows must be analyzed. Schedule K-1 reports should be scrutinized in the situations of partnerships. It would demonstrate how cash flow is broken down by partners and what income and debt may be discretionary.

The fact that one can transfer income from one source to service the debt of another source is the basic tenent of global cash flow analysis. Revenue sources must be analyzed to make sure that they are not circular or that a pyramid-like supporting scheme is not involved.

To some extent all global cash flow analysis reflects a system of circular support. The main factor would be the timing involved that would make the support appear discretionary or not. In order to make proper adjustments, loan officers must cut through the circular support and analyze all related businesses as individual structures.

By deterining whether these individual structures can stand on their own in the demand and supply of global cash flow, a determination can be reached as to whether the entity can tap into sufficient cash flow to service its debt. Once the determination is made, it should stand as representing a balanced and sustainable economy.

One should not rob Peter to pay Paul. In all events, this actually happens. It is just the time-delay that is involved which makes it expedient for Peter to rob Paul at this time or that time. The decision depends on the global cash flow which Peter requires. If Peter is not underwater, he may delay his robbing of Paul and avoid killing the economic system.

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Cash flow statement may also be called?

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