Cash Flow Forecasts

Question 1

What are Cash Flow Forecasts?

Answer 1

Cash Flow forecasts are used to predict when money will come in and out of business over a period of time.

Question 2

What are Cash Inflows?

Answer 2

Cash Inflows are sums of money received by a business. E.g: from sales.

Question 3

What are Cash Outflows?

Answer 3

Cash Outflows are sums of money paid out by a business. E.g: to buy raw materials or pay workers

Question 4

Advantages of Cash Flow Forecasts.

Answer 4

1. Help them to make decisions. 2. Makes sure a business always has enough cash to pay suppliers and employers. 3. Used in business plans.

Question 5

Disadvantages of Cash Flow Forecasts.

Answer 5

1. Not always accurate 2. Needs lots of experience and research into the market. 3. If not accurate, could fail. 4. Dynamic markets can cause change to suddenly happen, therefore customer preferences can change.

Question 6

How do you work out Net Cash Flow?

Answer 6

Cash inflows - cash outflows

Question 7

How do you work out Closing Balance?

Answer 7

Opening balance + net cash flow