Using cash-flow forecasting

Question 1

cash flow:

Answer 1

the amounts of money flowing into and out of a business over a period of time

Question 2

cash inflows:

Answer 2

receipts of cash, typically arising from sales of items, payments by debtors, loans received, rent charged, sale of assets and interest received.

Question 3

cash outflows:

Answer 3

payments of cash, typically arising from the purchase of items, payments of creditors, loans repaid or given, rental payments, purchase of assets and interest payments.

Question 4

net cash flow:

Answer 4

the sum of cash inflows to an organisation - cash outflows over a period of time.

Question 5

cash-flow cycle:

Answer 5

the regular pattern of inflows and outflows of cash within a business.

Question 6

liquidity:

Answer 6

the ability to convert an asset into cash without loss or delay

Question 7

Difference between profit and cash-flow:

Answer 7

cash-flow: movement of cash into and out of a firms bank account.
profit: when revenue is greater then total costs.

Question 8

cash-flow forecasting:

Answer 8

the process of estimating the expected cash inflows and cash outflows over a period of tine. Cash flow is often seasonal, so it is advisable to forecast for a period of a 1 year.

Question 9

cash-flow statement:

Answer 9

a description of how cash flowed into and out of a business during a particular period of time.