Using cash flow forecasting Flashcards
What is cash flow?
The total cash payments into a business minus the total cash payment
What is liquidation?
This is turning assets into cash and may be insisted on by court if suppliers have not been paid.
What is insolvent?
When a business cannot meet its short term debts.
What are cash inflows?
Payments in cash received by a business such as those from customers or from the bank.
What are cash outflows?
Payments in cash made by a business such as those to suppliers and staff.
What are debtors?
These are customers who have brought products on credit and will pay cash at an agreed date in the future.
What is credit sales?
Value of goods sold to customers who do not pay cash immediately.
What is a cash flow forecast?
An estimate of a firms future cash inflows and outflows.
What is net monthly cash flow?
The estimated difference between monthly cash inflows and outflows.
What is the opening balance?
Cash held by the business at the start of the month.
What is the closing balance?
Cash held at the end of the month, which becomes the next months opening balance.
