analysis of cash flow information Flashcards
what can alert an enterprise to cash flow problems?
The differences between forecast and actual cash flow
why can cash flow information be analysed?
to find out where there is a problem - in inflows or outflows
what will the size of the closing balance indicate to the enterprise?
that it may need to take action to
improve cash flow
positive closing balance: large positive closing balance
why is it positive that the enterprise has plenty of cash?
It can pay its bills, and there will be money for expansion plans or to invest
positive closing balance: small positive closing balance
what does the enterprise have cash to use it for?
it’s bills and to trade
positive closing balance: small positive closing balance
what may an enterprise not have enough money to purchase?
new fixed assets
negative closing balance: large positive closing balance
what will the enterprise not have cash to pay?
it’s bills
negative closing balance: large positive closing balance
why will an enterprise take immediate action?
to improve its inflows and reduce its outflows, otherwise it may cease trading.
negative closing balance: small positive closing balance
what does the enterprise not have cash to pay?
it’s bills
negative closing balance: small positive closing balance
why may an enterprise be able to get a short-term bank loan or overdraft?
to enable it to continue trading while
it takes action to sort out its cash flow problem
