Cash Flow Flashcards
1
Q
What factors affect cash flow
A
Sales can change
Costs can change
Credit can change
Stock levels can change
2
Q
How do you improve cash flow from customers
A
- reduce trade credit
- chase up late payments
- Employ a factor
3
Q
Ways to increase cash flow?
A
- de stock
- loans
- improve cash inflows from customers
- increase sales revenue
4
Q
What is cashflow
A
The movement of cash in and out of a businesses bank account
5
Q
Inflows include
A
Sales revenue
Capital
Loans
Grants
6
Q
Outflows
A
Purchases
Rents & rates
Utilities
Wages and salaries
7
Q
Why do businesses forecast cash flow
A
- identify potential cashflow problems in advance
- Make sure that there is sufficient cash available to pay suppliers
- provide evidence in support of loan application
8
Q
What can a lack of cash cause
A
Liquidity
Insolvency
9
Q
What is liquidity
A
The amount of liquid assets available to a business
10
Q
What is insolvency
A
- Person/business who are incapable for paying their debts
11
Q
How to calculate net cashflow
A
Inflows - outflows
12
Q
What is needed to build a cash flow forecast
A
- opening balance
- income per period
- expenditure per period
- closing balance
13
Q
How to calculate closing balance
A
NCF + OPENING BALANCE = CLOSING BALANCE
14
Q
LAST MONTHS CB =
A
Next months opening balance
