Costs Flashcards
Where can businesses get funding from ?
Government Shareholders Friends and family Banks Investors
Why is cash flow management important?
Insight into cash flow position
Shows if a business can survive in the short term
Helps structure repayments
What is the equation for closing bank balance ?
Net cash flow + opening bank balance
What is the equation for opening bank balance?
Previous closing bank balance
What is the equation for total inflow?
Add up all of the inflows
What is the equation for total outflow?
Add up all of the outflows
What is the equation for net cash flow?
Inflow - outflow
What is cash flow forecasting ?
A prediction of the money that flow in and out of the business over a period of time
What are the main causes of cash flow problems?
Low profits
Seasonal demand
Allowing customers too much credit
Too much production capacity
What are the limitations of creating a cash flow forecast?
May not always be accurate Lacks validity Limited information Very time consuming Provides short term analysis
What is statement of comprehensive income?
Provides a summary of a company’s net assets over a given period of time
What is cost of sales?
The carrying value of goods sold during a particular period
What is gross profit?
Gross profit is the profit the company makes after deducting the costs associated with making and selling its products
What is net profit?
The number of sales money remaining after all operating expenses, interest, tax, and stock dividends have been deducted from total revenue
What is working capital?
A measures of a company’s liquidity and short term financial health
