2.1.4 cash flow Flashcards
1
Q
what is cash flow forecasting?
A
cash flow predicts the cash inflows and the cash outflows of a business
2
Q
what is a cash flow statement?
A
is a financial statement that summarises the amount of cash entering and leaving the comapny
3
Q
what are cash outflows?
A
any income or money going into the business
4
Q
what are cash outflows?
A
money leaving the business
e.g materials labour
5
Q
what is opening balance?
A
bank balance at the start of the month. it is also the same as closing balance from the previous mmonth
6
Q
what is net cash flow?
A
cash inflows - cash outflows
7
Q
what are the causes of cash flow problems?
A
- poor credit control
- overtrading
- inaccurate cash floe management
- unforeseen costs
- allowing too much trade credit
8
Q
how can you increase cash inflows?
A
- reduce trade credit
- sell of stock
- put capital in
9
Q
how do you decrease cash outflows?
A
- delay payments to suppliers
- cut costs
- increase trade credit with suppliers
10
Q
what are the benefits of cash flow forecasting?
A
- investment opportunities
- can identify a potential cash flow crisis
- to support a budgeting process
11
Q
what are the limitations of cash flow forecasting?
A
- doesnt take into account any external factors
- can be inaccurate
- can be biased
