HP 10B - Manual (Page 47)

Up-arrows represent positive A
cash flows (money received). ' * '
The horizontal line represents
time. It is divided into regular
periods.
5,000.00
1 I 2 I 3 4 I 5 I 6 7 I 8 I 9 I 10i 11 12 113 114 115 116
\ - \ - r \
- 5,000.00
Down-arrows represent negative
cash flows (money paid out).
- 6.000.00
- 7.000.00
Any cash flow example can be represented by a cash flow diagram. As you
draw a cash flow diagram, identify what is known and unknown about the
transaction.
Time is represented by a horizontal line divided into regular time periods.
Cash flows arc placed on the horizontal line when they occur. Where no
arrows arc drawn, no cash flows occur.
Signs of Cash Flows
In cash flow diagrams, money invested is shown as negative and money
withdrawn is shown as positive. Cash flowing our isnegatiycy cash flowing
in IS positive.
For example, from the lender’s perspective, cash flows to customers for
loans arc represented as negative. Likewise, when a lender receives
money from cuslomcns, cash flows arc represented as positive. In contrast,
from the borrower’s perspective, cash borrowed is positive while cash paid
back IS negative.
44 4: Picturing Financial Problems