2.1.4 Planning Flashcards
What is a business plan?
A plan that shows how a business will develop
What will a business plan provide?
-a plan with goals
-a roadmap for development
-flag ups of potential problems in the future
What is a cash flow forecast?
Receipts of cash inflows and cash outflows over a future period of time
What is the formula for the opening balance?
The previous closing balance
What is the formula for closing the balance?
Opening balance + net cash flow
What is the formula for net cash flow?
Total receipts - total payments
What is the use for a cash flow forecast?
-To control and monitor cash flow
What are the advantages of using a cash flow forecast?
-Risk management
-Financial planning (when bus may need to borrow money)
-Helps with decision-making
What are the disadvantages of using a cash flow forecast?
Uncertainty as it is based on estimates
-Changes in the economy could affect
