ch 32

Question 1

cashflow forecast

Answer 1

the prediction of all expected recipients and expenses of a business over a future time period time

Question 2

cash inflows

Answer 2

the flow of money in the business

Question 3

cash outflow

Answer 3

the flow of money out of the business

Question 4

net cash flow

Answer 4

the difference between inflows and outflows over a period of time

Question 5

solvency

Answer 5

the degree to which a business is able to meet its debts when they fall due

Question 6

net cash flow formala

Answer 6

in-out

Question 7

opening

Answer 7

last months closing

Question 8

closing

Answer 8

opening+net

Question 9

the use of cashflow forecasts

Answer 9

1)identifying the timing of cash shortages and surpluses:if they want to borrow cash
help with seasonal damand
2) supporting applications for finance: helping to rasie fiance
3)enhancing the planning process
4)montaring cashflow

for PPQ
-allows a business to plan its spending
-help identify when they have cash shortages

Question 10

limitations

Answer 10

ppq
-declining credit sales/cash inflows(need to find a way to increase revenue)
-a negative cash inflow is likely to continue (to the other months?)

book
1)based on estimations coast may chnage varaible
if the thefiugures forecast in and out are not accurate then forecasting will be done wrong
2)external factors
3)takes time and money (resources)
4)only focuses one one element