Cash Flow Flashcards
1
Q
why does cash flow mean?
A
the availability of physical money the business has to pay for day to day such as wages.
2
Q
why is cash flow important?
A
it is important a business monitors its cash flow so that’s its finance runs smoothly as this will also allow the business to operate smoothly.
3
Q
cash flow problems and solutions
A
- P - too much money tied up in stock -S- introduced JIT system
- P- too much time being given to customers to pay their debts (credit period)
- S- offer cash discounts as a way to encourage them to pay faster
- P- not enough money being generated from sales -S- increase advertising and promotions - raise awareness - raise sales - raises cash flow
- P- generic problems
- S- sell assets no longer required
