Cash Flow Flashcards
Why do the banks need cash flow forecasts?
To assess potential risks when looking at giving out loans
Why does the management need cash flow forecasts?
To take action to avoid a negative cashflow or liquidayion, monitor performance, can assess opportunity cost of holding too much
What is a cash flow problem?
When a business can’t pay liabilities ( current) as they fall due
How can a business ease cash flow by altering inflows?
Overdraft, sale of assets, debt factoring, short term loan, sale and leaseback, reduce credit terms
How can a business ease cash flow by altering outflows?
Delay payments, delay spending through leasing, cut overheads
What is a good cash flow forecast?
It is updated regularly, has sensible assumptions, allows for unexpected change
