Cash Flow Forecast Flashcards
What is the definition of a cash flow forecast
It is a statement that identifies the money coming in and the money going out of a business over a period of time
What is an inflow
The money the business receives
Coming into a business
What is an outflow
Any money that leaves the business
Coming out of the business
Give examples of inflows
Sales of products Sales of assets Interest in savings Capital from owners Bank loans
Give examples of outflows
Payment to suppliers Rent Wages Bills Advertising Equipment Machinery Stuck Interest on a loan
What are “ receipts “ also known as
Inflows
what are “payments “also known as
Outflows
How to calculate the net cash flow
Total inflows - total outflows
How to calculate the closing balance
Net cash flow + opening balance
If u have a negative closing balance what is this known as ?
A deficit ( when a business does not have enough money to cover the outflows )
If I have a positive closing balance what is the known as ?
A surplus ( when a business has enriched extra money in their account )
What is a deficit
When a business does not have enough money to cover the outflows
What is a surplus
When a business has enough extra money in their account
What does cash flow forecast not show a business
Profit and loss!!!!!
What is the difference between profit and cash
Profit is the amount of money that a business has left once all costs have been paid
Whereas cash is the money that the business has available to spend at any specific moment