finance Flashcards
why forecast cash flow? (3)
- to identify when a busines is likely to have a shortfall or surplus of cash
- to avoid cash flow problems
- to obtain finance
what are the limitations forecasting cash flow problems? (2)
They may not be accurate because:
- the figures are only an estimate
- prices of goods sold and cost of goods brought may change
how may forecasting cash flow problems be accurate?
because it may be based on past experiance
what is a negative cash flow?
a cash flow shortag eor a deficit
what could solving cash flow problems lead to? (4)
- increased sales
- slow down outflows
- use a debt factoring company
- arrange an overdraft
what is cash flow
the amount of money flowing into a business (income) and flowing out (expenditure) at any one time
what are cash inflows? give 2 examples
money a business receives
- sales revenue
- interest received
3 examples of cash outflows (expenditure)
- raw materials
- wages
- bills
how will a busines run out of money
if they spend more than they have
what is a cash flow forecast?
a statement showing the expected flow of money into and out of the a business over a period of time
what is perfect competition? (2)
- a market where a business has lots of competitors
- many small firms with extremely low market shares
what is a monopoly? (2)
- a market where a business has no competiton at all
- a business with market share of at least 25%
benefits of increased competiton on customers/consumers? (3)
- lower prices
- variety of products/ services, more choice
- improvements of quality of goods and services
benefits of increased competition overall (for businesses)
- a greater discipline on producers/suppliers to keep their costs down
- improvements on technology- with good effects on production methods and costs
disadvatages of a a very un-competitive market (monopoly)
- less choice
- higher prices
- lower quality?
