Cashflow and working capital chap31 Flashcards
1
Q
Reasons for cashflow forecasts?
A
- allows strategic decisions/planning to put into place
- helps set prices
- looked at by potential investors
2
Q
Limitations of cashflow forecasts…
A
- changes in technology
- changes in interest rate
- just estimates
- world events
3
Q
Cash inflows…
A
- sales revenue
- loans from the banks
- grants from the government
4
Q
Cash outflows…
A
cash leaves the business to pay for material, labour, marketing, interest payments and loans.
5
Q
Causes of cashflow problems include…
A
- level of sales
- business environment
- excess stock
- late payments from debtors
- paying creditors
6
Q
Cashflow forecasts vs cashflow statements…
A
cashflow forecasts = estimate the likely inflows and out flows.
cashflow statements = looks at the past rather than future, actual figures are produced.
7
Q
Why is cashflow important to a business?
A
without cashflow wages can’t be paid, loans can not be repaid and raw materials can’t be bought. Without cashflow there would be no business
8
Q
What can help improve the cashflow of a business?
A
- increase sales
- leasing not buying
- loans
- changing creditor/ debtor days
- factoring
