1.3.3 - Cash Flow Flashcards
1
Q
What is a cash flow forecast?
A
Estimates of how much cash will come into and leave the business over a year
2
Q
Pros of a cash flow forecast
A
Useful when deciding to :
- recruit new staff
- expand
- spot times when cash might run out
3
Q
Cons of a cash flow forecast
A
- Like the weather, not always true
4
Q
Net cash flow equation
A
Cash in - cash out for the month
5
Q
Closing balance =
A
Opening balance + net cash flow
6
Q
Closing balance of one month goes a long to the next month? True or false
A
True :)
7
Q
How to improve cash flow ( via cash in )
A
- Diversity seasonal products
- Overdrafts or loans
- Get our customers to pay sooner
8
Q
How to improve cash flow ( via cash out )
A
- Spread out payments
- Cheaper raw materials
- Trade credit ( buy now pay later )
9
Q
What’s the difference between profit and cash?
A
Profit is recorded straight after the sale compared to cash which is recorded when the money is received or spent.
10
Q
Some sources of cash in:
A
- Sales revenue
- Owners funds
- Gov. grants
- Sponsorship
- Bank loan
11
Q
Sources of cash outflow:
A
- Payments of wages
- Repayments of loans
- Tax ( VAT )
- Buying equipment
- Payments to suppliers
