2.1.5 CASH FLOW FORECASTS Flashcards by Liv Lonsdale

Q

what is a cash flow forecast

A

a prediction of the cash inflows and cash outflows for a business

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Q

causes of cash flow problems

A

overtrading
allowing too much trade credit to customers
inaccurate management
unforeseen costs

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Q

benefits of forecasting

A

support an application for lending
support the budgeting process
identify any potential cash flow crisis

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Q

limitations of forecasting

A

some figures will be based on estimates
variables are constantly changing
they focus on only cash and don’t consider other variables such as probability or productivity

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