During the regime of Margaret Thacher in the UK pioneered the concept of disinvestment in real estate. Then this concept spreads through America then to China Singapore, Japan, South Korea, Taiwan, Brazil and now to India. Then new economy of Canada and Mexico as a result of North American Free Trade Agreement (NAFTA), has opened up new revenues and avenues for reality business there as well.
A rate of return often used in real estate transactions. The calculation determines the cash income on the cash invested. Cash-on-cash return would measure the annual return you made on the property in relation to the down payment.
Cash-On-Cash Return= Annual Dollar Income/Total Dollar Investment
When a decision is made to involve the private sector in the provisioning of housing and infrastructure, there are various options and procurement rules there to be followed. It is important for private sector because the procurement route defined will be responsible for various crucial aspects. Housing is the basic need for humanity and the challenges embedded within it can be a through housing research.
Cash on cash return in real estate investing in real estate industry can be aptly classified basically three broad categories. Mega privatization, macro privatization, and micro privatization. Mega privatization brings the catalytic influence to the life of the citizens which ultimately helps the other tow categories.
Cash on cash return in real estate investing is must for the investor and its success depends upon de bureaucratization ,internal privatization contracting out, Greenfield privatization , franchising , cold privatization corporation ,divestiture , re privatization ,liberalization, deregulation , rolling privatization and distressed privatization.
Cash on cash return in real estate investing depends upon the above described factor. Cash on cash return in real estate investing depends upon various market forms and then the investor can take advantages with it by following some prescribed customs and traditions.
Observe the changing of the competitive private market from absolute state monopolies. Change to private production run from purely government production run. Change to consumer payment from government subsidy. Change to unviable form viable category of items. Change to non merit from merit categories of items. Change to profit making from loss making. Cash on cash return in real estate investing can take advantage by investing in this market scenario.
Look for the organization or public entity where quick decision making, carrot and the stick method, government bars the competitive advantages, incentives from the government and the real estate, hire and fire method , share holders and investors must be the partners of the business ,and the motivation factor and good communication to investors is available.
Cash on cash return in real estate investing can be used to one’s advantage by following some procedures like avoid imperfect communication and out dated information from the organization , observe the frequency of transactions in housing by individuals, asses the every unit of the real estate organization separately as need based , observe the variance of pricing ,the purchasing opportunities , minimize use of subsidies ,leverage financial resources , scope for innovations , a provided target safety net for the investors ,tax incentive to housing and urban link investments , mass media for public opinion, privatization in administrative control and procedures , consultancy services and special court for dispute redressal and settlement then decide whether to invest it or not. If you already have invested in the real estate organization then these points can be examined if you want to know the real health of the organization.
No single modalities of cash on cash return in real estate investing are free from fault. Since, the individual investment can plays a significant role so emergence of stronger individual investment should be supported.
Utility of cash-flow analysis:
A cash flow statement is useful for short term planning. A business enterprise needs sufficient cash to meet its various obligation in the near future such as payment for purchase of fixed assets, payment of debts maturing in the near future, expenses of the business etc.
i) It helps in efficient cash management – Cash is the basis for all operations and hence a projected cash flow statement will enable the management to plan and coordinate the financial operations properly. The management can know from which source it will be derived, how much can be generated internally and how much could be obtained from outside.
It helps in internal financial management-It provides information about funds which will available from operation. This will help the management inn determining policies regarding the internal financial management eg, Possibility of repayment of long term debt, dividend policies, planning replacement of plant & machinery etc.
Discloses the movement of cash- The increase in or decrease of cash and the reasons therefore can be known. It discloses the reasons for low cash balance in spite of heavy operating profit or for heavy cash balance in spite of low profit.
Discloses success or failure of cash planning – The extent of success or failure of cash planning can be known by comparing the projected cash flow statement with the actual cash flow statement and necessary remedial measures can be taken.
Cash flow statement can nor be equated with the income statement. An income statement takes in to account cash as well as non-cash items and therefore net cash flow does not necessary mean net income of the business.
The cash balance as disclosed by the cash flow statement may not represent the real liquid position of the business since it can be easily influenced by postponing purchase and other payment.
Cash flow statement can not replace the income statement or fund flow statement. Each of them has a separate function .
However, the technique of cash flow statement when used in conjunction with ratio analysis serves as barometer in measuring the profitability and financial position of the business. Read More.
Ultimately as we know in business the prime importance factor is the generation of cash and understanding its various ways to differentiate and manage the different formulations where all of these should have been probably for the betterment of business environment where everything comes at the sharp contrast in hours of crisis.